Date: 20000420
Docket: T-1649-99
BETWEEN:
SOCIETY OF COMPOSERS, AUTHORS
AND MUSIC PUBLISHERS OF CANADA,
Plaintiff,
- and -
728859 ALBERTA LTD.,
Defendant.
REPORT OF REFERENCE
As to the Amount of Licence Fees owing
by the Defendant Judgment Debtor to the Plaintiff
Judgment Creditor for the Years 1998, 1999 and 2000
and Interest to Date, Damages and Costs.
MR. JOHN A. HARGRAVE,
PROTHONOTARY
[1] This Reference, pursuant to the Order of the Chief Justice, 20 December 1999, to determine the licence fees and other amounts owing by 728859 Alberta Ltd. (called "Alberta Ltd."), to the Society of Composers, Authors and Music Publishers of Canada (the "Society of Composers"), arises out of an action in which the Society of Composers sought licence fees for live and recorded music utilized by Alberta Ltd. The Society of Composers is now in the position of a judgment creditor, judgment having been obtained in default of defence 7 December 1999.
[2] The Reference took place at Vancouver, British Columbia on 5 April 2000. While the Order, setting the Reference and requiring production of documents by which to calculate the licence fees owed to the Society of Composers, was served upon Alberta Ltd., no one representing Alberta Ltd. attended at the Reference.
LAW AS TO CALCULATION OF LICENCE FEES AND DAMAGES
[3] The remedies open to the Society of Composers include not only what is due under the appropriate Tariff for the use of music, but also damages and, in appropriate circumstances, there may be exemplary or punitive damages, such remedies being cumulative: see for example Prisé de Parole Inc. v. Geurin, Editur Ltee. (1996) 104 F.T.R. 104 (F.C.T.D.) and Pro Arts Inc. v. Campus Crafts Holdings Ltd. (1981) 50 C.P.R. (2d) 230 (Ont. H.C.).
[4] In the absence of a defendant judgment debtor I am to calculate the licence fees as best I can: see for example Performing Rights Organization of Canada Ltd. v. 497227 Ontario Ltd. (1987) 11 C.P.R. (3d) 289 at 293. I am to assess such damages broadly, in a rough and ready fashion if necessary, but also in a common sense way: see for example Society of Composers, Authors and Music Publishers of Canada v. Cook County Saloon Ltd. (1997), 72 C.P.R. (3d) 63 at 65 and Performing Rights Organization of Canada Ltd. v. 497227 Ontario Ltd. (supra) at 293-294.
[5] This same approach is also applicable to damages, here a claim for exemplary damages. When damages are difficult or impossible to determine a judge or referee must do the best he or she can: PSAC v. DND (1996), 199 N.R. 81 at 97 (F.C.A.) or, as put by Mr. Justice Collier in Guerin v. Canada [1982] 2 F.C. 385 at 440, an approach to assessment of damages accepted by the Supreme Court of Canada [1984] 2 S.C.R. 335, it is up to the judge to determine what seems reasonable and proper. All of this perhaps has its basis in Lewis v. Todd [1980] 2 S.C.R. 469 at 708-709:
| Third, the award of damages is not simply an exercise in mathematics which a judge indulges in, leading to a "correct" global figure. The evidence of actuaries and economists is of value in arriving at a fair and just result. That evidence is of increasing importance as the niggardly approach sometimes noted in the past is abandoned, and greater amounts are awarded, in my view properly, in cases of severe personal injury or death. If the Courts are to apply basic principles of the law of damages and seek to achieve a reasonable approximation to pecuniary restitutio in integrum expert assistance is vital. But the trial judge, who is required to make the decision, must be accorded a large measure of freedom in dealing with the evidence presented by the experts. If the figures lead to an award which in all the circumstances seems to the judge to be inordinately high it is his duty, as I conceive it, to adjust those figures downward; and in like manner to adjust them upward if they lead to what seems to be an unusually low award. |
In effect this approach requires a best estimate of damages.
[6] Indeed, such a best estimate will not be set aside even if it is a matter of guess work: see for example Wood v. Grand Valley Railway Co. (1915) 22 D.L.R. 614 at 618 where Mr. Justice Davie of the Supreme Court of Canada, comments on a situation on which it was impossible to estimate damages with anything approaching mathematical accuracy, there referring to Chaplin v. Hicks [1911] 2 K.B. 786:
| It was clearly impossible under the facts of that case to estimate with anything approaching to mathematical accuracy the damages sustained by the plaintiffs, but it seems to me to be clearly laid down there by the learned Judges that such an impossibility cannot "relieve the wrongdoer of the necessity of paying damages for his breach of contract" and that on the other hand the tribunal to estimate them whether jury or Judge must under such circumstances do "the best it can" and its conclusion will not be set aside even if "the amount of the verdict is a matter of guess work." |
Mr. Justice Davies concluded at page 619 of Grand Valley Railway, that it was for the Court to use its own common sense. I now turn to the applicable Tariffs.
APPLICABLE TARIFFS
[7] The Society of Composers is the performing rights society authorized by the Copyright Board of Canada to carry on the business, in Canada, of issuing licences to and collecting licence fees from entities wishing to perform copyright musical works in public. The Tariffs of fees are authorized by section 67 through 67.2 of the Copyright Act, R.S.C. 1985, c. C-42. By section 68.2 of the Copyright Act the Society of Composers may, in default of payment of the Tariff, recover the fees in the Federal Court.
[8] As to the Tariffs themselves, they are filed yearly by the Society of Composers, however until the approval of the Tariff for a given year by the Copyright Board, the Society of Composers continues to collect royalties in accordance with the most recently approved Tariff: section 68.2(b) of the Copyright Act.
[9] In the present instance, while the Society of Composers has filed proposed Tariffs for 1999 and 2000, it is the 1998 Tariff which has been approved and which governs for the present claim which consists of the years 1998, 1999 and 2000. Here I would note that the fee for a given year is payable in advance not later than the 31st of January.
APPROACH TO ASSESSMENT
[10] The assessment of the royalty or licence fees are, as I have indicated, calculated using given figures and rates from approved Tariffs and various statistics as to the operation of the licencee.
[11] In the present instance, because there was no representation on behalf of Alberta Ltd. and because they produced no documents, although ordered to do so, I must calculate the licence fees as best I can.
[12] To assist me in arriving at licence fees for the years in question, I have been provided with the affidavit of Wayne Saunders, a field representative with the licencing department of the Society of Composers, working out of Edmonton. The background of Mr. Saunders includes that of a professional musician. Moreover, in the course of his duties, and this is pertinent in assessing the use and value of music at the premises of Alberta Ltd., the Whitecourt Inn and specifically two areas known as The Corall and as Whisper"s Lounge, that he has inspected not only those specific establishments, but also hundreds of other establishments in Alberta and is familiar with the nature and character of those and other establishments and also with the cost of live entertainment.
[13] In addition, also as a guide to entertainment costs at the Whitecourt Inn, the Society of Composers puts forward copies of June 1998 licence applications upon which some payment was apparently made.
[14] The Society of Composers is prepared to accept the annual fee for recorded music calculated by Alberta Ltd. on their 1998 licence application, being $826.40, for the three years in question. Further, as to the use of live music in the Whisper"s Lounge, the Society of Composers, on the basis of the 1998 licence application, submits that it ought to be the minimum fee, $80 per year, for each of the three years.
[15] The licence fee for the live music used in The Corall presents a substantial diversion of views as between the 1998 licence application form submitted by Alberta Ltd. and the estimate set out by Mr. Saunders in his affidavit. The estimate of Alberta Ltd. is that they would spend $20,000 on live music in 1998. This contrasted with the view of Mr. Saunders that Alberta Ltd. spends at least $40,000 in each calendar year for live musical entertainment in The Corall. Mr. Saunders" affidavit is straight forward. He was not cross-examined on it. I accept his figure of $40,000 per year as the best estimate of the likely cost of live entertainment.
[16] Working from the 1998 Tariff, which is the applicable Tariff for 1998, 1999 and the present year, 2000, the figure owed by Alberta Ltd. for each year is as follows:
| Tariff A The Corall 3% of $40,000 $1,200 |
| Tariff 3A Whispers minimum fee $80 |
| Tariff 18 base rate of $258.25 for the 1st 100 |
| patrons plus Tariff 18 increase for room capacity |
| above 100 patrons $826.40 |
| TOTAL $2,106.40 |
As I have indicated, because the 1998 Tariff remains in effect, further Tariffs having been proposed but not yet approved, the figure is the same for each year. Further, in that the licence fee is due and payable the 31st of January each year and that the operation of Alberta Ltd. apparently is ongoing, the licence fee for the year 2000 is also due and payble.
[17] As to interest, the Tariff provides that there be interest on outstanding accounts at the Bank of Canada rate plus 1%, calculated monthly. On this basis the Society of Composers has provided an interest calculation, showing interest due to the 5th of April 2000, of $448.37. That figure appears not to take into account the payment on account of $2,248.62, referred to in Mr. Saunders" affidavit. In essence, one year"s fees and a little more have been paid, but the material does not indicate the date of payment. I therefore assume it was payment of the 1998 fees in 1998. I thus recommend interest at $169.57.
DAMAGES
[18] The Society of Composers has, in effect, claimed both general damages and exemplary damages. The former are by way of the licence fees. The weakness in stopping merely at licence fees is that a user of music to which the clients of the Society of Composers hold the rights might, in the event that the only damages were the licence fees outstanding, look upon legal proceedings not as either punishment or deterrent, but merely as a cost of doing business, indeed, not an excessive cost and one only to be encountered if the Society of Composers noticed and prosecuted the infringement. The addition of taxable costs payable by a Defendant in such an instance is relatively small. Thus, a claim for punitive or exemplary damages may be in order.
[19] Punitive damages ought to be awarded cautiously. There must be grounds for awarding damages, for the purpose of which is to punish. In this instance Alberta Ltd. tendered licence application forms, but without money. Granted there was some payment on account. I am satisfied that the Society of Composers followed up by making a number of requests for payment, without any result.
[20] Moreover, Alberta Ltd. ignored the present legal proceedings. All of this, as well as causing the Society of Composers to expend additional time and money to enforce rights on behalf of its members, shows a substantial disregard not only for the Tariff process for paying for music upon which to at least enhance and probably base its operation, but also a disregard for the legal process.
[21] The leading authority on punitive damages is Hill v. Church of Scientology of Toronto and Manning [1995] 2 S.C.R. 1130. The general principle to keep in mind is that "... punitive damages should only be awarded in those circumstances where the combined award of general and aggravated damages would be insufficient to achieve the goal of punishment and deterrence." (page 1208).
[22] In Profekta International Inc. v. Lee (1998), 75 C.P.R. (3d) 369, Mr. Justice of Appeal Linden, in writing for the Court, added $10,000 in punitive damages to the sum already awarded for compensatory damages in a situation in which there had been a continuing violation of copyright by the respondent. In that case there were other factors, including ignoring a cease a desist letter and an attitude on the part of the respondent, that she would rather pay legal fees in order to contest the applicant"s claim than to abide by the copyright. The Court of Appeal felt that this award satisfied the test put by Hill , being that of outrageous conduct requiring punitive damages to act as a deterrent.
[23] In summary, punitive damages may be awarded where a defendant has acted in a high-handed or contemptuous manner, in order to both punish and to make an example by which to deter others. It is conduct that is "... extreme in its nature and such that by any reasonable standard it is deserving of full condemnation and punishment.": Vorvis v. Insurance Corporation of British Columbia [1989] 1 S.C.R. 1085 at 1108.
[24] In the present instance, given the ongoing breach, the ignoring of letters requesting the licence fee and the ignoring of the present legal proceedings, it would be remiss to fail to recommend an award of exemplary damages.
[25] Counsel for the Plaintiff refers to perhaps analogous cases, Performing Rights v. Patrick Holdings Ltd. (1987) 13 C.P.R. (3d) 177 and Performing Rights v. Transom Investments Co. Ltd. (1987) 13 C.P.R. (3d) 97, as examples of exemplary damages where established, by a referee, at $10,000 and at $15,000. I do not think the present situation warrants a $15,000 award of exemplary damages, however I am prepared to recommend exemplary damages at $10,000.
COSTS
[26] The Plaintiff has provided a draft bill of costs, supported by appropriate material. The taxable service items are midrange in Column III. They are reasonable and are recommended as presented, including GST, at $1,819.
[27] Disbursements are what one would expect, as to Federal Court filing fees, service and various courier charges. There are other items, which come to mind, such as long distance telephone charges and photocopying, which are not included in the disbursement account. The disbursement account is recommended as presented at $508.82.
[28] Total fees and disbursements are recommended at $2,327.82.
CONCLUSION
[29] I recommend that the Plaintiff judgment creditor be awarded, as against 728859 Alberta Ltd., the following:
| 1. Damages in the form of licence fees for 1998, 1999 and 2000, in the amount of $6,319.20, less payments on account totalling $2,248.63, leaving a balance of $4,070.57. |
| 2. Interest at $169.57. |
| 3. Punitive Damages at $10,000 |
| 4. Costs and Disbursements $2,327.82 |
[30] I thank counsel for the Plaintiff for a thorough and well documented presentation.
(Sgd.) "John A. Hargrave"
Prothonotary
April 20, 2000
Vancouver, British Columbia
FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS ON THE RECORD
COURT FILE NO.: T-1649-99
| STYLE OF CAUSE: SOCIETY OF COMPOSERS AUTHORS AND MUSIC PUBLISHERS OF CANADA |
v.
728859 ALBERTA LTD.
PLACE OF HEARING: VANCOUVER, B.C.
DATE OF HEARING: April 5, 2000
REPORT OF REFERENCE OF MR. JOHN A. HARGRAVE, PROTHONOTARY
DATED: April 20, 2000
APPEARANCES:
| Mr. Kenneth Dangerfield for the Plaintiff |
SOLICITORS OF RECORD:
Boughton Peterson Yang Anderson
| Vancouver, BC for the Plaintiff |