Date: 20051207
Docket: T-1758-03
Citation: 2005 FC 1644
OTTAWA, ONTARIO, DECEMBER 7TH 2005
PRESENT: THE HONOURABLE MR. JUSTICE LEMIEUX
BETWEEN:
THE CANADIAN COPYRIGHT LICENSING AGENCY
("ACCESS COPYRIGHT")
Plaintiff
- and -
U-COMPUTE and
RIAZ A. LARI
Defendants
INTRODUCTION
[1] The Canadian Copyright Licencing Agency ("Access Copyright" or the "plaintiff") seeks a six-month imprisonment of Riaz A. Lari (the "defendant") in contempt proceedings brought in this Court pursuant to Rules 466 to 472 of the Federal Courts Rules, 1998, (the "Rules").
[2] The nub of the plaintiff's allegations against the defendant is that Mr. Lari is guilty of contempt because he has disobeyed several orders of this Court contrary to paragraph 466(b) of the Rules.
[3] Pursuant to section 467 of the Rules, the plaintiff obtained an ex parte order from Prothonotary Milczynski on October 5, 2004, ordering Mr. Lari to appear before a judge of the Federal Court in Montreal and be prepared to hear proof that he is in contempt of court for his breach of this Court's September 29, 2003, January 19, 2004 and September 20, 2004 orders, as well as his breach of this Court's July 19, 2004 judgment and that he be prepared to present any defence he may have.
[4] The subject matter of the orders and judgment referred to in paragraph 3 of these reasons pertains to the unauthorized copying of textbooks published by Canadian and foreign book publishers who own copyright in such textbooks in Canada and who have granted to the plaintiff a licence to exercise and manage the reproduction rights in the publishers' textbooks.
[5] On September 29, 2003, Justice Layden-Stevenson issued an Anton Pillar order in support of a copyright infringement action requiring the defendants U-Compute and Mr. Lari to deliver up all unauthorized copies of textbooks within their possession, custody or control. The order applied to the defendants' business premises at 2159 rue MacKay, Montreal. The Anton Pillar order also contained an interim injunction restraining the defendants from directly or indirectly making or selling any copies of any textbooks published by any entity listed in Appendix "A" including any copies of any textbook or parts of textbooks listed in appendices "B" or "C" of the Anton Pillar order. This order was only executed in early January 2004.
[6] On January 19, 2004, Justice Tremblay-Lamer, upon a review of the execution of the Anton Pillar order issued by Justice Layden-Stevenson, continued the interim injunction until judgment in the action or any other final disposition and ordered that all materials delivered up by the defendants shall remain in the custody or control of the supervising solicitor and shall be used only for purposes of the action.
[7] On July 19, 2004, Justice Harrington issued a consent judgment in the action in the following terms:
(1) "Lari, his employees, partners, agents, affiliates, relatives in collaboration with him, and all those persons under his control, or any one of them, carrying on business at 2159 MacKay Street in Montreal, Quebec, or elsewhere, (hereinafter "Lari") are hereby permanently enjoined from making, distributing, selling, exposing or offering for sale, renting, exhibiting in public or parting with possession of unauthorized copies, in whole or in substantial part, of the works published by any of the entities listed in Schedule A hereto"; [emphasis mine]
(2) Mr. Lari is permanently enjoined pursuant to section 39.1 of the Copyright Act;
(3) Mr. Lari shall pay the plaintiff the sum of $500,000 as statutory damages for all infringements involved in the proceedings;
(4) Mr. Lari shall pay the plaintiff the sum of $100,000 as punitive damages; and
(5) Mr. Lari shall pay the plaintiff its costs of the action on a solicitor and his own client scale which is fixed at $100,000.
[8] On September 20, 2004, Justice Von Finckenstein of this Court granted, in paragraph 3 of his order, the plaintiff leave to attend at 2144 MacKay Street, the basement premises of 2144 MacKay Street (believed to be 2140 MacKay Street), 2153 and 2155 MacKay Street (the "premises"), without prior notice to Mr. Lari or any other person to:
(1) search for and remove all paper copies of any works published by any entity listed in Schedule "A" to the judgment of July 19, 2004; and
(ii) search for, inspect and remove all hard drives or other machines which, upon inspection, contain copies of the works previously referred to.
[9] Paragraph 8 of that order provided that "Mr. Lari or other persons in charge of the Premises shall permit entry of the Premises to the plaintiff for the purposes referred to in paragraph 3 above".
[10] Prothonotary Milczynski's October 5, 2004 show cause order specified the acts which the defendant Riaz A. Lari is charged with. They were:
(a) that in the period January 8, 2004 to July 19, 2004, he continued to make and sell, and collaborate with other persons who make and sell, unauthorized copies of works published by one or more entities listed in Schedules "A" to "C" of the Order dated September 29, 2003, in breach of paragraph 31 thereof and paragraph 2 of the Order made January 19, 2004;
(b) that in the period July 20, 2004 to September 22, 2004, he continued to make and sell, and collaborate with other persons who make and sell, from 2153 MacKay Street and 2144 MacKay (basement) Street in Montreal, Quebec, unauthorized copies of works published by one or more entities listed in Schedule "A" to the judgment dated July 19, 2004, in breach of paragraphs 1 and 2 thereof; and
(c) on September 22, 2004, he refused access to the basement premises of 2144 MacKay Street as required by paragraph 8 of the Order of September 20, 2004, thereby frustrating the plaintiff's execution of the Order and avoiding the removal of unauthorized copies of textbooks that were observed to be at those premises from at least September 9, 2004 to September 22, 2004. [emphasis mine]
[11] Mr. Lari is the sole defendant in this contempt proceeding, the Court being informed that U-Compute was in bankruptcy.
THE CONTEMPT PROCEEDINGS
[12] Rule 469 specifies that "a finding of contempt shall be based on proof beyond a reasonable doubt". The plaintiff called seven witnesses who gave evidence over two days.
[13] As is his right under subsection 470(2) of the Rules, Mr. Lari did not testify and the defence called no witnesses.
(1) The testimony of Warren Sheffer
[14] Access Copyright's first witness was Warren Sheffer who is its legal counsel in Toronto. The purpose of his evidence was to tell the Court who Access Copyright is, what it does and what is the basis of its operations.
[15] Access Copyright was created in 1988 by Canadian authors and publishers and was formally known as CanCopy until June 2002 when it changed its name. Access Copyright is a reproduction rights organization. Through affiliation agreements, it obtains from authors and publishers an exclusive grant of reproduction rights.
[16] Access Copyright is also a collective society under section 70.1 of the Copyright Act. Based on its exclusive grant of reproduction rights, it in turn licences copy shops and others to copy textbooks in exchange for royalties which it collects and distributes to the authors and publishers concerned.
[17] Currently, Access Copyright has 6,000 author affiliates and close to 400 publisher affiliates. In 2002 and 2003, Access Copyright distributed in excess of $19 M in royalties to its rights holders. In terms of its licensees, Access Copyright licences a variety of organizations such as all levels of government, universities, private companies, copy shops and individuals in the community on a one-off basis.
[18] Mr. Sheffer traced the history of CanCopy/Access Copyright's problems with Mr. Lari and U-Compute which I summarize as follows:
(1) Following a complaint from one of its publisher members of illegal textbook copying, the solicitors to the plaintiff sent a cease and desist letter, dated October 8, 1999, to Mr. Lari as the controlling mind of U-Compute.
(2) Sworn affidavit dated November 5, 1999, by Mr. Lari as President and sole Director of U-Compute undertaking that neither U-Compute nor he personally shall at any time in the future make or have caused to be made, sold or distributed unauthorized copies of copyright works as prohibited under the Canadian Copyright Act.
(3) An October 31, 2000 order issued by Justice Gibson on consent whereby Mr. Lari and U-Compute and all persons under their control are permanently restrained from making, offering for sale, selling, distributing or exposing for sale unauthorized copies, in whole or in substantial part, of nine specific textbooks set out in Appendix "A" of the order.
(4) Upon determining that the permanent injunction was being breached, the plaintiff brought contempt proceedings against Mr. Lari and U-Compute which resulted in Justice O'Keefe's March 19, 2001 order based on Mr. Lari's admission of having breached the October 31, 2000 permanent injunction. Mr. Lari and U-Compute were fined $2,500 by way of penalty and were ordered to pay $10,000 to the applicant by way of compensation for costs. In addition, one representative of the plaintiff was permitted access to U-Compute's premises. Furthermore, the Court ordered that they refrain from doing the acts they were enjoined from doing by the order of October 31, 2000.
(5) Upon further investigation by the plaintiff, a further contempt proceeding was brought before Justice Martineau for breach of the two aforementioned orders which led to an admission of breach by Mr. Lari and U-Compute. They were fined $5,000, ordered to pay solicitor-client costs and ordered to refrain from breaching the two existing orders. Mr. Sheffer told the Court that Access Copyright decided to waive its solicitor-client costs provided Mr. Lari complied with the orders.
(6) It was upon the receipt of further information about infringing activities that Access Copyright sought and was issued an Anton Pillar order issued in September 2003.
[19] Mr. Sheffer informed the Court of the results of the execution of the Anton Pillar order issued by Justice Layden-Stevenson.
[20] Mr. Sheffer said that over two thousand copies of infringing works were found at U-Compute's premises which were ultimately seized and following Justice Harrington's judgment, destroyed. 377 copied textbooks were not seized because of uncertainty surrounding the plaintiff's reproduction rights. He produced for identification Exhibit P-15 entitled "U-Compute Book Inventory" printed on January 13, 2004 from Mr. Lari's computer. The list has 107 pages. He did not know how many copies of the works had been sold but he calculated that if only one infringing copy of each of the 468 works had been made and sold by Mr. Lari the lost revenue to the publisher would be $44,000. Mr. Sheffer told the Court the Anton Pillar proceedings led to the minutes of settlement which was reflected in Justice Harrington's July 19, 2004 consent judgment.
[21] On July 20, 2004, counsel for Access Copyright forwarded to Mr. Lari a certified copy of the Minutes of Settlement and advised that should there be any breach of the July 19, 2004 judgment, Access Copyright would seek a further contempt order with a term of incarceration of no less than six months (Exhibit P-17).
[22] It was after further investigation Access Copyright sought the order which Justice Von Finckenstein issued on September 20, 2004, and, as a result of that order, it gained access, on September 22, 2004, to 2153 and 2155 but not to 2144 Mackay Street and discovered what Mr. Sheffer testified to as a large-scale infringing activity but that the works were actually being sold at an unmarked location across the street, namely 2144 MacKay Street. A further U-Compute book inventory this time dated September 24, 2004 (P-18 for identification) was printed from the hard-drive of a computer on the premises. P-18 was compared with the inventory list previously referred to in Exhibit P-15 for identification. As a result of that comparison, Mr. Sheffer said the inventory list of September 24, 2004, had grown by 288 additional titles of which 181 were published by Access Copyright's rights holders.
(2) The testimony of Elena Wegner
[23] Elena Wegner is an investigator with King-Reid and Associates who was asked by Access Copyright to conduct an investigation at a copy shop located at 2155 MacKay Street. As a result of the investigation, she determined Mr. Lari also had business premises at 2153 MacKay Street. The purpose of her investigation was to determine if Mr. Lari was engaged alone or with others in the making or sale of copied textbooks at the premises. She retained the services of Chartrand, Laframboise, an investigation firm in Montreal to help out in the investigation.
[24] On August 31, 2004, she went to the premises at 2155 MacKay Street and saw a sign on the door which said Compu-X-Press had moved downstairs to 2153 MacKay Street and underneath the words Compu-X-Press, the name of Mr. Lari appeared. She walked down to 2153 MacKay Street and recorded her observations by way of a small portable video recording device. She described the shop at 2153 MacKay Street having two rooms with the front room very cramped with computer related products for sale with little orange price tags on them that bore the name U-Compute. Also in the front portion of the room, there were three self-serve photocopiers. In the back room, she saw three large commercial photocopiers. She identified Mr. Lari as one of the persons there; she saw him in the back room of the store using one of the commercial photocopiers.
[25] She identified an individual whom she called Employee #2 and captured his physionomy on videotape from which she made a photograph, which, after my ruling on an objection from defence counsel, was entered into evidence as Exhibit P-21.
[26] She characterized the individual as an employee because, on August 31, 2004, posing as a customer asking questions about printers for sale, he was the salesperson who served her and answered all of her questions.
[27] She returned to 2153 MacKay Street on September 1, 2004, where she encountered another person working there whom she called Employee #3 whose photograph was entered as Exhibit P-22, a photograph printed from her video recorder. She concluded he was an employee because he was behind the counter in an area reserved for staff and came out to serve her. She also saw Employee #2 that day working behind the counter with the cash register and serving customers.
(3) The testimony of Guy Forget and Michel Latour
[28] It is convenient to summarize the testimony of these individuals who are investigators with Chartrand, Laframboise and who, with the aid of video recorders, observed from their parked cars the comings and goings at 2153 MacKay Street and between 2153 and the basement at 2144 MacKay Street. Mr. Forget's surveillance was during business hours of August 31, September 1 and September 8, 2004 while Mr. Latour's surveillance was during September 9, 2004. Photographs taken from their videos were then entered into evidence.
[29] I take the following from their evidence:
(1) both investigators identified Mr. Lari and Employees #2 and #3;
(2) Mr. Forget's observations were confined to 2153 MacKay Street for August 31st and September 1, 2004, but expanded to include the new basement location at 2144 MacKay Street on September 8, 2004;
(3) for the first two days of his surveillance, Mr. Forget observed many young people enter 2153 empty-handed but leaving with bound books in boxes or bags;
(4) Mr. Forget observed Mr. Lari on September 1, 2004, cross MacKay Street and go into the basement of 2144; the premises were empty but he saw Mr. Lari sweeping the floor;
(5) his video identified a sign at 2155 MacKay Street indicating Compu-X-Press had moved downstairs;
(6) Mr. Forget's observations on September 8, 2004, concords with those of Mr. Latour on September 9, 2004. They saw Employees #2 and #3 cross MacKay Street back and forth between 2153 and 2144 several times during those two days sometimes carrying boxes or bags, the contents of which they could not identify and, once, Employee #3 was seen carrying a binding machine;
(7) they saw Mr. Lari, at 2153, many times pointing people to a place across the street and most of the time these individuals, who looked like students, would cross the street and descend into the basement at 2144;
(8) on those two days, they saw many people enter 2153 and then cross the street to 2144; the traffic between those two premises on those two days was constant;
(9) these customers would come to 2144 not carrying anything but would leave carrying plastic bags;
(10) Mr. Latour was emphatic in his testimony that the material being carried from the basement of 2144 were bound books or bound material held together with a black plastic binder. Both he and Mr. Forget testified they could not see the titles of the materials. Mr. Latour said he saw one customer leaving carrying bound material in his/her hands and he testified he could see through the plastic bags and could identify the bound material held together by black plastic binders which to him appeared to be books.
(4) The testimony of Natasha Schwarzl
[30] Natasha Schwarzl is an investigator with Chartrand, Laframboise . Her investigations were conducted on September 8, 9, 13, 16, 21 and 22, 2004.
[31] On September 8, 2004, she attended at 2153 at 9:00 in the morning and spoke to a woman (later identified as Mrs. Lari) from whom she attempted to purchase four books, the titles of which had been supplied to her by Elena Wegner. She was told books were not sold there but, after further inquiry, was informed that copied books could be available. She came back to 2153 MacKay Street on September 9, 2004 at 11:00 a.m. and, as a result of a conversation with the woman which the defence admits is Mrs. Lari, went across the street to the basement at 2144 Mckay Street. Her video records the basement premises at 2144 as an unmarked or unidentified location without external signage with access through a single door.
[32] She then spoke to a person she identified as Employee #3 and asked him if he had any copies of books of the four titles she named. She was referred to another person whom she identified as Employee #2 who indicated to her he had one book in store and there was another one that could be available on the following Monday. The book in store he had was Organization, Development and Change by Cummings and Worley, published by Thomson-Southwestern (Exhibit P-19), for which she paid $35.00. She asked for a receipt but did not obtain one.
[33] She testified that in the basement premises there were lots of books on the floor and on the counters and saw Employee #3 binding a copied book. She also saw empty boxes; she did not see any cash register and saw nothing else for sale but bound volumes. She did not see any photocopying machines at the premises. She left with Employee #2 the name of the book, title and author "Getting to Yes" by Fischer for pick-up the following Monday.
[34] On September 13, she went back to 2153 MacKay Street and spoke to Employee #3 behind the counter. Mr. Lari was also there. She asked them if she needed to go to 2144 in order to pick up the book. Following instructions she went back to the basement at 2144 where she saw four or five people with Employee #2 attending them and handing over copied books. She confirmed seeing again copied books on the floor and on the counters and in what she identified as a back storage. She asked him for the book "Getting to Yes" by Fischer but he did not have the book. She then came back to 2153, ordered a mouse for her computer, gave the money to Mr. Lari, and received a receipt.
[35] On September 16, 2004, she returned to 2153 and saw Employee #3 behind the counter. Mr. Lari was also there. She gave Employee #3 an original text of a book titled "Organization Theory", published by Prentice Hall, which she had bought from the bookstore at Concordia University and asked if she could get a copied book of the original. Employee #3 showed the book to Mr. Lari who spoke to her and was told it would be ready Saturday or Monday and that it would cost $35.00.
[36] On September 21, 2004, she once again returned to 2153 MacKay Street to pick up the copied book. Mr. Lari was there. He went in the back store and returned with the original book and the copied book (P-20) and she handed him $35.00.
[37] She then left the premises at 2153 and crossed the street to the basement at 2144. The door was locked. She went back to 2153 and was told it would open between noon and 6:00 p.m. At 1:00 p.m. she returned to the basement of 2144. Employee #2 was in the door and did not let her and three other persons who were there into the premises.
[38] On September 22, 2004, she went back to 2144 MacKay Street at approximately 11:30 a.m. but it was locked. She returned again around noon. It was open. She went in and saw Employee #2 selling copied books to individuals. She saw books on the floor, on the counter and also boxes on the counter.
[39] Responding to a question from the Court, she estimated that at 2144 there were more than 100 copies because the floor behind the counters and the counters themselves were covered with copied books.
[40] On cross-examination, when she saw Employee #3 handing out copied books to customers on September 13, 2004, she acknowledged she could not see any of the titles on the bound documents. She also acknowledged that while she saw titles on copied documents on the floor, she could not tell what the title was and likewise for the documents in the back room at 2144. She answered "I don't remember" to a question on cross-examination whether she saw Mr. Lari sell any other books while she was at 2153 to pick-up a copy of Organizational Theory. On a follow-up question by the Court, she acknowledged that if she had seen Mr. Lari sell a copy of a book to another person, she would have recorded that.
(5) The testimony of Catherine Bergeron
[41] Catherine Bergeron is an attorney called to the Quebec Bar in 2001 and is employed as an associate at the law firm of Léger, Robic, Richard, specializing in intellectual property. She and her colleague, Alexandra Steele were retained to execute Justice Von Finckenstein's order at both 2153, 2155 and the basement at 2144 MacKay Street.
[42] On September 22, 2004, at approximately 1:20 p.m., she, an articling student and a bailiff attended the premises at 2144. She proceeded downstairs to the basement premises which were locked and there being no activity there. She reiterated there was only one door and no external signage. She returned to the sidewalk and waited until 5:30 p.m. when she once again tried the door which remained locked all afternoon. She did, however, observe during that time approximately 70 people trying to open the door. At approximately 5:30 p.m., she went to 2153 MacKay Street to assist her colleague Alexandra Steele with the execution of the order.
[43] She stated that she located three copied books in the bathroom at 2155. She identified the three books: Short-Term Financial Management published by Southwestern Thomson Learning; Intermediate Accounting, published by John Wiley & sons Canada Ltd.; and Working Through Conflict, publisher unknown.
[44] On cross-examination, she reiterated finding the books at 2155 MacKay Street which are the premises above 2153 MacKay Street; it was in the bathroom at 2155 MacKay Street the books were found. She acknowledged there was no business activity there and it was mostly empty.
[45] On re-examination, she stated 2155 and 2153 MacKay were interconnected by a stairway.
(6) The testimony of Alexandra Steele
[46] Alexandra Steele is also an attorney with Léger, Robic, Richard and specializes in intellectual property litigation. She had supervised, in January 2004, the execution of the Anton Pillar order authorized by Justice Layden-Stevenson. She testified that at the time, i.e. early January 2004, 2,261 copied textbooks were delivered up by Mr. Lari. These books had been scanned and stored on a computer located on the premises and were available to be printed out. She confirmed that the U-Compute book inventory list identified as P-15 was printed at her firm from a hard drive seized under the Anton Pillar order.
[47] Ms. Steele also attended on the execution of Justice Von Finckenstein's September 20, 2004 order. That order was executed on September 22, 2004, at premises located at 2153 and 2155, which was successful but unsuccessful at 2144 for reasons stated by Catherine Bergeron.
[48] Alexandra Steele encountered Mr. Lari who was served with the order; she provided him with an opportunity to speak to his attorney to whom she faxed a copy of the order. After receiving a further phone call from his attorney, Mr. Lari permitted her to execute the order at 2153 and 2155 but she was unable to obtain access from Mr. Lari to 2144 MacKay Street.
[49] With the assistance of a computer technician, Alexandra Steele proceeded to Mr. Lari's office, conducted a search of a computer located there and, as a result, printed from the computer hard-drive (Exhibit P-18, P-46), various book lists being an inventory of 3,530 books, most of which had been scanned (Exhibit P-47).
[50] Ms. Steele testified she was never provided access to the basement premises at 2144 MacKay Street, notwithstanding the fact she asked Mr. Lari for access.
ANALYSIS
(a) Is Mr. Lari guilty of contempt
(i) Principles
[51] As noted, Rule 469 provides that "a finding of contempt shall be based on proof beyond a reasonable doubt".
[52] Justice Cory in R. v. Lifchus, [1997] 3 S.C.R. 320, explained the notion of reasonable doubt writing the following at paragraphs 36 and 37 of the Court's reasons:
¶ 36 Perhaps a brief summary of what the definition should and should not contain may be helpful. It should be explained that:
. the standard of proof beyond a reasonable doubt is inextricably intertwined with that principle fundamental to all criminal trials, the presumption of innocence;
. the burden of proof rests on the prosecution throughout the trial and never shifts to the accused;
. a reasonable doubt is not a doubt based upon sympathy or prejudice;
. rather, it is based upon reason and common sense;
. it is logically connected to the evidence or absence of evidence;
. it does not involve proof to an absolute certainty; it is not proof beyond any doubt nor is it an imaginary or frivolous doubt; and
. more is required than proof that the accused is probably guilty -- a jury which concludes only that the accused is probably guilty must acquit.
¶ 37 On the other hand, certain references to the required standard of proof should be avoided. For example:
. describing the term "reasonable doubt" as an ordinary expression which has no special meaning in the criminal law context;
. inviting jurors to apply to the task before them the same standard of proof that they apply to important, or even the most important, decisions in their own lives;
. equating proof "beyond a reasonable doubt" to proof "to a moral certainty";
. qualifying the word "doubt" with adjectives other than "reasonable", such as "serious", "substantial" or "haunting", which may mislead the jury; and
. instructing jurors that they may convict if they are "sure" that the accused is guilty, before providing them with a proper definition as to the meaning of the words "beyond a reasonable doubt".
[53] In Lifchus, supra, Justice Cory formulated directives for the benefit of trial judges concerning the standard of proof beyond a reasonable doubt. He wrote the following at paragraph 39:
¶ 39 Instructions pertaining to the requisite standard of proof in a criminal trial of proof beyond a reasonable doubt might be given along these lines:
The accused enters these proceedings presumed to be innocent. That presumption of innocence remains throughout the case until such time as the Crown has on the evidence put before you satisfied you beyond a reasonable doubt that the accused is guilty.
What does the expression "beyond a reasonable doubt" mean?
The term "beyond a reasonable doubt" has been used for a very long time and is a part of our history and traditions of justice. It is so engrained in our criminal law that some think it needs no explanation, yet something must be said regarding its meaning.
A reasonable doubt is not an imaginary or frivolous doubt. It must not be based upon sympathy or prejudice. Rather, it is based on reason and common sense. It is logically derived from the evidence or absence of evidence.
Even if you believe the accused is probably guilty or likely guilty, that is not sufficient. In those circumstances you must give the benefit of the doubt to the accused and acquit because the Crown has failed to satisfy you of the guilt of the accused beyond a reasonable doubt.
On the other hand you must remember that it is virtually impossible to prove anything to an absolute certainty and the Crown is not required to do so. Such a standard of proof is impossibly high.
In short if, based upon the evidence before the court, you are sure that the accused committed the offence you should convict since this demonstrates that you are satisfied of his guilt beyond a reasonable doubt.
[54] Counsel for the defendant, on several occasions during his argument, argued there was no direct evidence on specific points particularly on the lack of identification of the titles of the photocopied books, if any, which is essential to determine whether Mr. Lari was in contempt by breaching the Court orders identified above. This argument triggers the notion of circumstantial evidence and what must be satisfied in order to find guilt on the criminal law standard. I note, however, there was direct evidence of the sale of two photocopied textbooks infringing the plaintiff's reproduction rights, one sale made by Mr. Lari himself, the other sold at 2144 MacKay Street.
[55] It has consistently been held by the Supreme Court of Canada that circumstantial evidence can be the foundation for the finding of guilt beyond a reasonable doubt adopting the rule formulated by Baron Alderson in Hodge's case (1838), 168 E.R. 1136, as follows:
They [the jury] must be satisfied, "not only that those circumstances were consistent with his having committed the act, but they must also be satisfied that the facts were such as to be inconsistent with any other rational conclusion than that the prisoner was the guilty person.'"
[56] As was pointed out by Justice Ritchie in R. v. John, [1971] S.C.R. 781, the formulation in Hodge's case, supra, was approved by the Supreme Court of Canada in R. v. Comba, [1938] S.C.R. 396.
[57] In John, supra, Justice Ritchie quoted with approval what Justice Spence had said in the R. v. Mitchell, [1964] S.C.R. 471 that "the direction in Hodge's' case did not add to or subtract from the requirement that proof of guilt in a criminal case must be beyond a reasonable doubt. It provided a formula to assist in applying the accepted standard of proof in relation to the first only of the two essential elements in a crime; i.e., the commission of the act as distinct from the intent which accompanied that act. The first element, assuming every circumstance could be established by evidence, would be capable of proof to a demonstration".
[58] In John, supra, Justice Ritchie concluded the language used in Hodge's case, supra, "does nothing more than provide a graphic illustration of the principle that where the evidence is purely circumstantial it must be made plain to the jury that in order to be satisfied of the guilt of the accused beyond a reasonable doubt, they must first be satisfied that the circumstances are such as to be inconsistent with any other rational conclusion than that the accused was the guilty person". He added that if the jury was left in doubt as to whether or not the circumstances were equally consistent with some conclusion other than guilt, then it was their duty to give the accused the benefit of the doubt and not to convict him on the circumstantial evidence standing alone.
[59] In that case, Justice Pigeon described the concept of circumstantial evidence as requiring facts such that their existence is a premise from which the existence of the principal fact may be concluded by necessary laws of reason. He stated to support the conviction those facts must be such that guilt can properly be rationally inferred from them. If guilt cannot rationally be deduced from the set of facts proven by circumstantial evidence, there is no need to consider the further question whether any other rational conclusion is possible.
[60] For further illustrations, reference may be had to R. v. Mezzo, [1986] 1 S.C.R. 802, and R. v. Monteleone, [1987] 2 S.C.R. 154.
[61] In short, circumstantial evidence is proof of subordinate facts from which a tribunal may reasonably draw the inference that the principal or material facts vital to the case have been established.
[62] Prothonotary Milczynski's October 5, 2004 show-cause order is the sole point of departure in the assessment whether Access Copyright has discharged its burden of proof showing that Mr. Lari is guilty of contempt by breaching orders and one judgment of this Court.
[63] To recapitulate, the orders that enjoin Mr. Lari from reproducing textbooks for which Access Copyright has been licenced by copyright holders are the orders of this Court dated September 29, 2003, January 19, 2004, and the judgment of July 19, 2004. Also included is Justice Von Finckenstein's September 20, 2004 order compelling Mr. Lari to provide Access Copyright access to the basement of 2144 MacKay Street.
[64] What Access Copyright had to prove either by direct or circumstantial evidence was that, during the periods spelled out in Prothonotary Milczynski's October 5, 2004 order (from January 8, 2004 to July 19, 2004 and from July 20, 2004 to September 22, 2004), Mr. Lari continued to make and sell or in collaboration with other specified categories of persons to make and sell unauthorized copies of works published by one or more entities listed in the July 19, 2004 judgment issued by Justice Harrington.
[65] The evidence, in my view, does not show Mr. Lari making or selling unauthorized copies of works during the period from January 8, 2004 to July 20, 2004. The plaintiff had seized from the defendants all photocopied textbooks early in January 2004. There is no evidence of sale during that period.
[66] All of the evidence tendered by Access Copyright began with Ms. Wegner's visit on August 31, 2004, to Mr. Lari's shop at 2153 MacKay Street in Montreal when she identified Mr. Lari and two other persons working there. The evidence is clear Mr. Lari controlled the activities at this premise. Mr. Schaffer testified to Mr. Lari's previous involvement with Access Copyright's predecessor from 1999 as the controlling mind, President and sole Director of U-Compute who had consented to joint and several personal liability with U-Compute for past photocopying infringement.
[67] After her August 31st and September 1st, 2004, visits at Mr. Lari's shop, Ms. Wegner then retained the services of Chartrand, Laframboise, to conduct surveillance and the law firm of Roger, Robic, Richard, to execute post-judgment seizures. The focus of the investigation and seizure were concentrated during the first three weeks in September 2004. Access Copyright tendered direct evidence of Mr. Lari breaching the terms of the injunction not to sell a copy of an unauthorized work by a named publisher. That was the September 21, 2004 sale to Ms. Schwarzl of the book "Organization Theory" published by Prentice-Hall.
[68] I agree with counsel for Mr. Lari that, other than this one instance, there was no direct evidence of any further breach of injunction by Mr. Lari. However, there was a massive amount of circumstantial evidence that Mr. Lari was operating a high throughput copying enterprise targeting students studying at nearby Concordia University.
[69] The quality of that circumstantial evidence meets the test described in Hodge's case, supra. It is consistent with his having breached the injunction against copying unauthorized works by named publishers and is so strong that it is inconsistent with any other conclusion that Mr. Lari inevitably necessarily breached the injunction against making and selling those unauthorized copies either as the principal or in collaboration with the persons identified as Employees #2 and #3.
[70] The evidence establishes that:
(1) Access Copyright is the reproduction rights arm of numerous authors and many major publishing houses whose brands are well-known;
(2) Mr. Lari and his company had extensive inventory lists of computer-scanned unauthorized works available for copy, namely, Exhibit P-15, the January 13, 2004 inventory list, the fact of 2,261 copied textbooks which had been seized in January 2004, represented 468 separate books or titles which were by Access Copyright publishers and also Exhibit P-18, the September 24, 2004 inventory list which had expanded to 3,530 textbooks (less deletes) a substantial majority of titles were from Access Copyright publishers.
(3) To repeat, when the Anton Pillar order was executed at 2153 MacKay Street in January 2004, 2,261 copied textbooks were seized. An examination of Alexandra Steele's affidavit of January 14, 2002, sworn in connection with that execution (Exhibit P-40 in these proceedings) establishes that the overwhelming titles copied and seized were published by publishers who have agreements with Access Copyright.
(4) The uncontradicted evidence of Nathasha Schwarzl who, while in the basement at 2144 MacKay Street, saw Employees #2 and #3 selling copied textbooks to students and who estimated there were more than 100 copies on the floor, the counters and in the back space at that location.
(5) The evidence of the investigators who saw considerable traffic between the two locations at MacKay Street identified as students entering without any package but leaving the premises at the basement of 2144 MacKay Street with purchases identified as copied books in several cases.
(6) The evidence of Catherine Bergeron who was at 2144 MacKay Street on September 22, 2004 and who estimated she saw 70 persons trying to gain access to the premises.
[71] This evidence shows beyond a reasonable doubt that a high level copying enterprise was being operated by Mr. Lari at 2153, 2155 and 2144 MacKay Street.
[72] I have no doubt that the two individuals identified as Employee #2 and Employee # 3, were under his direction and control he, having acknowledged in previous proceedings, that he was the controlling mind of U-Compute. There is no doubt as to the interconnection between 2153 and 2155 and the operation in the basement of 2144 MacKay Street. Employees #2 and #3 were seen working in both locations and were seen carrying materials between those locations. Furthermore, Mr. Lari was seen directing business from 2153 MacKay Street to the basement at 2144 MacKay Street.
[73] Taking into account the scope of the illicit copying operation, the number of publishers with whom Access Copyright has arrangements, the similarity of the lists in Exhibits P-15 and P-18 and the fact that the January 2004 seizure yielded substantial unauthorized copies of works by entities Mr. Lari was enjoined not to make and sell, leads me to conclude, beyond any reasonable doubt, that during the period from August 31, 2004 to September 21, 2004, Mr. Lari substantially breached the permanent injunction found in the July 19, 2004 judgment of this Court. No other rational conclusion but guilt can flow from the evidence, both direct and indirect, before me.
[74] I also find that Mr. Lari, on September 22, 2004, refused Ms. Steele access to the basement at 2144 MacKay Street so that she could seize copies of books which were available for sale that same day at noon, as testified to by Mrs. Schwarzl. It is a reasonable inference from the evidence that Mr. Lari could have provided access to Ms. Steele to those premises but did not.
(b) What is the appropriate penalty
[75] Rule 472 sets out the penalty which a judge may order where a person is found to be in contempt. That Rule reads:
| 472. Where a person is found to be in contempt, a judge may order that
(a) the person be imprisoned for a period of less than five years or until the person complies with the order;
(b) the person be imprisoned for a period of less than five years if the person fails to comply with the order;
(c) the person pay a fine;
(d) the person do or refrain from doing any act;
(e) in respect of a person referred to in rule 429, the person's property be sequestered; and
(f) the person pay costs.
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472. Lorsqu'une personne est reconnue coupable d'outrage au tribunal, le juge peut ordonner :
a) qu'elle soit incarcérée pour une période de moins de cinq ans ou jusqu'à ce qu'elle se conforme à l'ordonnance;
b) qu'elle soit incarcérée pour une période de moins de cinq ans si elle ne se conforme pas à l'ordonnance;
c) qu'elle paie une amende;
d) qu'elle accomplisse un acte ou s'abstienne de l'accomplir;
e) que les biens de la personne soient mis sous séquestre, dans le cas visé à la règle 429;
f) qu'elle soit condamnée aux dépens. |
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[76] In Lyons Partnership, L.P. v. MacGregor, [2000] F.C.J. No. 341, this Court summarized the relevant factors to be considered in framing a penalty. In assessing the penalty for contempt the Court should consider the gravity of the contempt, deterrence of similar conduct, any profit made from the contemptuous conduct, whether the contempt offence is a first offence, the contemptor's past conduct and the presence of any mitigating factors such as good faith or apology.
[77] As noted, Mr. Lari did not testify in his defence as was his right. At his request, I granted him an opportunity to address the Court in respect of the appropriate penalty. He attended the Court on October 31, 2005, and was examined by his counsel and cross-examined by counsel for Access Copyright.
[78] Mr. Lari informed the Court that, after the execution of Justice Von Finckenstein's September 20, 2004 order, he sold his business on MacKay Street and, since then, has not engaged in the illegal copying or sale of textbooks. He is 50 years old and is currently employed as a manager of an Indian restaurant in the Montreal area earning approximately $500 a week, gross, and is the sole breadwinner for he, his wife and three school aged children.
[79] Mr. Lari several times apologized for his past behaviour stating his past conduct in illegal photocopying of textbooks had been a terrible mistake and that he regretted it.
[80] I was not impressed, to say the least, by Mr. Lari's testimony. He brought no documents with him to substantiate what he told the Court about the value of the family home, the mortgage on it, the balance of his line of credit, the salary he was earning, past income tax returns, past GST and QST sales tax returns, employee payroll and documents related to the sale of his business on MacKay Street.
[81] He gave contradictory testimony to the Court which irreparably affected his credibility. The major contradiction concerned the business being carried out in the basement premises at 2144 MacKay Street. He stated he had no connection with the operation carried out at that location where the evidence shows substantial sales of photocopied texts were taking place through employees #2 and #3 (for Mr. Lari's testimony on this point see transcript of proceedings, October 31, 2005, at pages 50 to 52). Through questioning, he admitted that all of the materials and equipment used to make the illegal books sold at 2144 MacKay in September of 2004, including the inventory list on his computers, came from his location at 2153 MacKay Street.
[82] I do not believe the two individuals identified as Employee #2 and #3 were independent of him. He contradicted himself on the point. At page 50 of the transcript, he referred to them as ex-employees. He admitted that he knew they were selling illegal books at 2144 MacKay Street and he admitted that he facilitated their enterprise.
[83] I find that, at the very least, Mr. Lari was associated with the enterprise at 2144 MacKay Street. I find that enterprise was deliberately set up by Mr. Lari as a sham attempt to dissociate himself from selling illegal photocopied texts at 2153 and 2155 MacKay Street.
[84] When confronted with the testimony given on behalf of Access Copyright that Mr. Lari had been observed directing students to 2144 MacKay Street, he had the audacity to suggest that he was not necessarily pointing to 2144 MacKay Street because there was another photocopy shop down the street. (See transcript pages 44, 45, 49 and 50.) The evidence is clear from the investigators that after Mr. Lari's pointing, the students went into 2144 MacKay Street.
[85] Applying the relevant factors to the crafting of an appropriate penalty, I find that all factors weigh heavily against Mr. Lari and I say this in the context of my finding of his lack of credibility. The contempt offence was a serious one. I accept the evidence given on behalf of Access Copyright that Mr. Lari was, in September of 2004, at a time when demand was at one of its two highest peaks during the university year, intimately involved in an illegal high volume operation of making and selling illegally copied textbooks. The purpose behind Access Copyright is not simply a private purpose but a public one. (See Canada (Canadian Private Copying Collective) v. Canadian Storage Media Alliance, a decision of the Federal Court of Appeal cited 2004 FCA 424.
[86] General deterrence is an important factor. Mr. Lari told us he knew of similar illegal photocopy shops not only around Concordia University but around l'Université de Montréal.
[87] The Court has no real evidence as to the profits made from the illegal operation. Mr. Lari did not record his sales of copied textbooks nor did he bring financial statements about his operation. In testimony before me, he intimated he made profits but those profits disappeared because he had to pay his own legal fees, those of Access Copyright in previous proceedings and certain initial installments on damages which he agreed to pay in respect of the consent judgment issued by Mr. Justice Harrington.
[88] Mr. Lari's past conduct speaks for itself: two previous contempt findings by this Court against him and the gearing up of the illegal operation immediately after he had consented to judgment in July of 2004.
[89] I doubt the sincerity of his apology and I have no evidence of substantial good faith.
[90] Weighing all of the relevant factors points to a substantial penalty, namely, incarceration which is what Access Copyright seeks and what Access Copyright told Mr. Lari it would be seeking should he further breach this Court's orders.
[91] I find attractive, with one modification, the alternative suggestion which counsel for Access Copyright put forward and which counsel for Mr. Lari endorsed: the imposition of a prison sentence but its immediate suspension subject to Mr. Lari meeting specific conditions which, if any were breached, on motion to the Court, could lead to his immediate incarceration.
[92] On balance, in the Order I am making hereunder, the financial conditions imposed, the condition of community service, the number of hours which I have increased from the amount suggested by counsel, and his obligation to respect the permanent injunctions in place, provide Mr. Lari an opportunity to make reparation and to contribute to society.
[93] This approach received favour from this Court in Clean-All Services Inc. v. Jasen Plunkett, Court file T-2051-01, in Guccio Gucci S.P.A. v. Silvert et al. (1988), 19 C.P.R.(3d) 526, in Hugo Boss A.G. et al. v. Sudsy's Enterprises Inc. (1990), 31 C.P.R. (3d) 525, Louis Vuitton S.A. et al. v. Tokyo-Do Enterprises Inc. et al. (1990), 37 C.P.R. (3d) 8, and Tele-Direct (Publications) Inc. v. Canadian Business Online Inc. et al. (1998), 85 C.P.R. (3d) 338.
O R D E R
I find RIAZ A. LARI guilty as charged in paragraphs (b) and (c) of Prothonotary Milczynski's October 5, 2004 show-cause order namely:
(b) that in the period July 20, 2004 to September 22, 2004, he continued to make and sell, and collaborate with other persons who make and sell, from 2153 MacKay Street and 2144 MacKay (basement) Street in Montreal, Quebec, unauthorized copies of works published by one or more entities listed in Schedule "A" to the judgment dated July 19, 2004, in breach of paragraphs 1 and 2 thereof; and
(c) on September 22, 2004, he refused access to the basement premises of 2144 MacKay Street as required by paragraph 8 of the Order of September 20, 2004, thereby frustrating the plaintiff's execution of the Order and avoiding the removal of unauthorized copies of textbooks that were observed to be at those premises from at least September 9, 2004 to September 22, 2004.
As an appropriate penalty, this Court orders:
(1) RIAZ A. LARI is hereby sentenced to a six-month term of imprisonment at Montée St-François Institution, 600 Montée St-François, Laval, Quebec, H7C 1S5;
(2) RIAZ A. LARI is hereby ordered to pay the costs of these contempt proceedings to the plaintiff on a reasonable solicitor-client scale to be taxed forthwith by a taxing officer inclusive of disbursements and GST; such costs shall be paid by Mr. Lari thirty (30) days after taxation.
(3) The imposition of the prison sentence in paragraph (1) is hereby suspended on the following terms:
(a) RIAZ A. LARI shall at all times comply with the terms of the permanent injunctions contained in paragraphs (1) and (2) of Justice Harrington's July 19, 2004 judgment;
(b) RIAZ A. LARI shall, within thirteen (13) months of the date of this Order perform four hundred (400) hours of community service at a hostel operated by the Salvation Army in Montreal or its suburbs by performing such volunteer work as may be directed by the Director of such hostel (Director). The Director shall inform the Court and counsel for the plaintiff in writing when such arrangement has been put into place. The performance of the community service shall be verified by the Director forwarding a certificate of performance with the Court and with counsel for the plaintiff no later than January 31, 2007.
(4) In the event the plaintiff wishes to prove that Mr. Lari has not complied with one or more of the terms set out in this Order, the plaintiff shall be at liberty to seek a warrant of committal from any Federal Court judge, on an ex parte basis or otherwise, as directed by such Judge, and RIAZ A. LARI shall, upon the Court finding a breach of one or more of such terms be committed to jail for six months.
(5) Nothing in this Order varies any of the terms contained in Justice Harrington's July 19, 2004 order that have not been performed.
"François Lemieux"
J U D G E
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-1758-03
STYLE OF CAUSE: THE CANADIAN COPYRIGHT LICENSING AGENCY v.
U -COMPUTE AND RIAZ. LARI
PLACES OF HEARING: Montréal and Ottawa
DATE OF HEARING: January 24 and 25, 2005, May 10, 2005 and October 31, 2005
REASONS FOR ORDER
and ORDER: Lemieux J.
DATED: December 7, 2005
APPEARANCES:
Mr. Arthur B. RENAUD FOR PLAINTIFF
Mr. Dany S. PERRAS FOR DEFENDANTS
SOLICITORS OF RECORD:
SIM, HUGHES, ASHTON & McKAY LLP
6 th Floor, 330 University Avenue
Toronto (Ontario) M5G 1R7 FOR PLAINTIFF
MICHELIN & ASSOCIATES
4101 Sherbrooke Street West
Montréal (Qc) H3Z 1A7
FOR RESPONDENT