Date: 20020131
Docket: T-1656-00
Neutral citation: 2002 FCT 118
BETWEEN:
DESNOES & GEDDES LIMITED
Plaintiff
- and -
HART BREWERIES LIMITED
Defendant
[1] This is a proceeding under Rules 466 and 467 of the Federal Court Rules, 1998 ("Rules") by which Lorne Hart, Ron Robinson and Hart Robinson Breweries Ltd. ("HRBL", all three together being "the respondents") were required by a "show cause" order to appear before a judge to hear proof with respect to an alleged contempt of court and to present any defence which they might have. None of the respondents are parties to this action, and HRBL was not represented and did not appear in the contempt proceedings before me.
HISTORY OF THE PROCEEDINGS
[2] The statement of claim in this action was filed on August 29, 2000. On November 27, 2000, Justice O'Keefe issued a judgment by default against Hart Breweries Limited ("HBL") which in material part declared that HBL had infringed the plaintiff's registered trademarks with registration numbers TMA435,053 - DRAGON and TMA378,266 DRAGON & Design ("the trademarks") and provided that:
4. The defendant, its directors, officers, servants, agents and anyone else under their control, are hereby permanently enjoined from, directly or indirectly, selling, offering for sale, distributing or advertising any brewed alcoholic beverage product, in Canada, in association with any of the following:
(i) the label shown in the photograph of the defendant's product attached as Schedule "A" to this Judgment;
(ii) the words DRAGON'S BREATH;
(iii) the words SOUFFLE DE DRAGON;
(iv) the dragon design which appears on the label shown in the photograph of the defendant's product attached as Schedule "A" to this Judgment;
(v) the word DRAGON;
(vi) any design which includes a depiction of a dragon or parts of a dragon;
(vii) words which are confusing with the trade marks DRAGON'S BREATH, SOUFFLE DE DRAGON or DRAGON; or
(viii) any other trade mark which is confusing with the plaintiff's trade marks.
5. The defendant shall within ten days after being served with this judgment deliver to the plaintiff under oath all articles in its possession, custody or power which would offend the injunction granted in paragraph 4 above.
[3] Thereafter, a show cause order was made by the Associate Senior Prothonotary on March 19, 2001 against the respondents. That show cause order did not describe the nature of the case alleged against the respondents, as required by Rule 467(1)(b), but simply recited the terms of Justice O'Keefe's order and alleged that the respondents had acted contrary to its terms.
[4] On the return of the show cause order, the Court raised the failure of the show cause order to comply with Rule 467(1)(b) and adjourned the proceeding after directing that a written statement particularizing each alleged act of contempt be served and filed. Such a statement was served and filed and it alleged the following acts of contempt:
a. On February 15, 2001, with notice of the Judgment, at the brewery located at 175 Industrial Avenue, Carleton Place, Ontario (the "Brewery"), Hart Robinson Breweries Ltd. ("Hart Robinson") offered for sale to the public; and directly or indirectly sold a brewed alcoholic beverage product, namely ale, to Vance Elliott in association with the words DRAGON'S BREATH, SOUFFLE DE DRAGON and the dragon design which appears on the label attached as Schedule "A" to the Judgment.
b. With notice of the Judgment, Hart Robinson has continued to, directly or indirectly, distribute a brewed alcoholic beverage product, namely ale, through the Liquor Control Board of Ontario and the Brewers Retail Inc., in association with the words DRAGON'S BREATH, SOUFFLE DE DRAGON and the dragon design which appears on the label attached as Schedule "A" to the Judgment.
c. Further particulars of the allegation in paragraph (b) above are that, each week during the period from December 15, 2001 to at least April 15, 2001, Hart Robinson, directly or indirectly, shipped brewed alcoholic beverage products, namely ale, to Brewer's Retail Inc. for distribution and sale to the public through Brewer's Retail Inc. retail outlets known as The Beer Store, in association with the words DRAGON'S BREATH, SOUFFLE DE DRAGON and the dragon design which appears on the label attached as Schedule "A" to the Judgment.
d. Hart Robinson has failed to deliver to the plaintiff under oath all article in its possession, custody or power which would offend the injunction granted in paragraph 4 of the Judgment. In particular, Hart Robinson has failed to deliver the following items:
i. a t-shirt displaying the words DRAGON'S BREATH, SOUFFLE DE DRAGON and the dragon design which appears on the label attached as Schedule "A" to the Judgment, worn by Lorne Hart during a tour of the Brewery given to Slavco Ilic and others on April 19, 2001;
ii. a poster showing a dragon figure raising a glass of beer which displays the words DRAGON'S BREATH, SOUFFLE DE DRAGON and the dragon design which appears on the label attached as Schedule "A" to the Judgment;
iii. packaging and labelling for 12x341ml cases and the bottles contained therein, of a brewed alcoholic beverage, namely ale, which display the words DRAGON'S BREATH, SOUFFLE DE DRAGON and the dragon design which appears on the label attached as Schedule "A" to the Judgment;
iv. a label used on a keg tap which displays the words DRAGON'S BREATH, SOUFFLE DE DRAGON and the dragon design which appears on the label attached as Schedule "A" to the Judgment;
v. a yellow poster which says "Caution for Rent Only" that displays the words DRAGON'S BREATH, SOUFFLE DE DRAGON and the dragon design which appears on the label attached as Schedule "A" to the Judgment;
e. Lorne Hart, a director of Hart Breweries Limited, who conducts the business of and is an agent for Hart Robinson and who holds himself out to be the owner of the Brewery, directly or indirectly, caused Hart Robinson to do the acts described in paragraphs (1)(a), (1)(b), (1)(c) and (1)(d) and thereby aided and abetted Hart Robinson to do them. He did so with personal knowledge of the Judgment.
f. Also, on April 19, 2001, Lorne Hart, directly or indirectly, caused and thereby aided and abetted Hart Robinson to advertise and distribute a brewed alcoholic beverage, namely ale, to members of the public, including Slavco Ilic, in association with the words DRAGON'S BREATH, SOUFFLE DE DRAGON and the dragon design which appears on the label attached as Schedule "A" to the Judgment. That day he conducted a tour of the Brewery wearing a t-shirt displaying the words DRAGON'S BREATH, SOUFFLE DE DRAGON and the dragon design which appears on the label attached as Schedule "A" to the Judgment and gave to Slavco Ilic a case of 12x650ml bottles of a brewed alcoholic beverage, namely ale, which display the label shown in the photograph of the defendant's product attached as Schedule "A" to the Judgment.
g. Ron Robinson, who held himself out to be and was the controller of Hart Robinson and an agent for Hart Robinson, aided and abetted Lorne Hart and Hart Robinson to do the acts described in paragraphs (1)(a), (1)(b), (1)(c), (1)(d), (1)(e) and (1)(f) above. He did so with personal knowledge of the Judgment.
THE APPLICABLE LEGAL PRINCIPLES
[5] Rule 466(c) provides that a person is guilty of contempt of court who "acts in such a way as to interfere with the orderly administration of justice, or to impair the authority or dignity of the Court".
[6] While only parties to an action are, in a strict sense, able to breach an injunction, any non-party with knowledge of the substance or nature of an injunction who disobeys or interferes with its purpose may be found to have interfered with the orderly administration of justice and thus be found guilty of contempt of court. See, for example: MacMillan Bloedel Ltd. v. Simpson, [1996] 2 S.C.R. 1048 at paras. 27, 31; Baxter Laboratories of Canada Ltd. v. Cutter (Canada) Ltd., [1983] 2 S.C.R. 388 at 396-97; and Tele-Direct (Publications) Inc. v. Canadian Business Online Inc., [1998] F.C.J. No. 1306 at para. 20.
[7] Other applicable principles canvassed by Justice Teitelbaum in Tele-Direct, supra, are:
· The party alleging contempt has the burden of proving such contempt, and the defendant or respondent need not present evidence to the Court.
· The constituent elements of contempt must be proved beyond a reasonable doubt.
· Mens rea and a presence of good faith are relevant only as mitigating factors relative to the penalties that are to be imposed.
[8] Contempt proceedings are a most serious matter. The fundamental purpose of the court's contempt power is to ensure respect for the judicial process so as to in turn secure the proper and effective functioning of the judicial system.
THE RELEVANT CORPORATE PARTIES
(i) HRBL
[9] Certified copies of documents issued by Industry Canada, under the provisions of the Canada Business Corporations Act, R.S.C. 1985, c. C-44 show that:
· It was incorporated on February 15, 2000.
· The company's registered office is at 175 Industrial Avenue, Carleton Place, Ontario.
· Effective February 25, 2000, William Urseth became the company's sole director.
(ii) HBL
[10] Certified records show with respect to HBL that:
· It was incorporated on June 3, 1993.
· Its registered and mailing office is 1805 Woodward Drive, Ottawa.
· Its president is Frits Borman.
· Lorne Hart is a director and the treasurer.
· There are three other directors.
· It is not shown as carrying on business under any registered business name.
[11] Corporate records were also filed with respect to one other corporation, The Hart Brewing Company LTD. ("THBCL").
(iii) THBCL
[12] The corporate records with respect to this company show that:
· It was incorporated on August 3, 1995.
· Its registered and mailing address is 175 Industrial Avenue, Carleton Place, Ontario.
· Its president was Frits Bosman, until as of February 20, 1998 when Mr. Urseth became president.
· It has five other directors, or officers, two of whom, Messrs. Nielsen and Richer, are also directors of HBL.
· It is not shown as carrying on business under any registered business name.
[13] From these documents it can be seen that both HRBL and THBCL have their registered offices at the same address, and share the same president. Other documents show that both companies filed proposals under the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 on the same day.
[14] The defendant HBL and THBCL share some common directors.
[15] Mr. Hart is a director and treasurer of the defendant HBL. Mr. Robinson is neither a director nor officer of any of these corporations.
[16] With that introduction I turn now to the evidence tendered to establish that the respondents had knowledge of the injunction issued by Justice O'Keefe on November 27, 2000.
EVIDENCE OF KNOWLEDGE OF THE INJUNCTION
[17] The evidence as to the service of the judgment was adduced through Vance Elliott, a process server. Mr. Elliott swore that:
· On December 12, 2000, he attended at 175 Industrial Avenue in Carleton Place to endeavour to serve the judgment.
· A photo taken by Mr. Elliott in December of the year 2000 shows a sign outside those premises describing it to be the "home" of HBL.
· On December 12, 2000, Mr. Elliott spoke to Mr. Hart at the brewery at 175 Industrial Avenue and showed him the judgment. At that time Mr. Hart told him that the company operating at the brewery at that time was HRBC. Mr. Elliott therefore left without serving the judgment and sought further instructions.
· In early January, 2001, Mr. Elliott returned and left a copy of the judgment with Mr. Hart. At that time Mr. Robinson was with Mr. Hart. Mr. Elliott believes this was done on January 9, 2001.
[18] Mr. Elliott was not cross-examined by counsel for Messrs. Hart and Robinson on his evidence that on or about January 9, 2001 he served a judgment on Mr. Hart and that Mr. Robinson was then with Mr. Hart. No contrary evidence was adduced. On this evidence I am satisfied beyond a reasonable doubt that as of early January 2000, Mr. Hart and Mr. Robinson were aware of the judgment of Justice O'Keefe and the injunction contained therein.
[19] As for HRBL, the evidence with respect to its connection with the brewery operation at 175 Carleton Place and its knowledge of Justice O'Keefe's judgment is as follows:
· The judgment was served on Mr. Hart at the registered office of HRBL. On December 12, 2000 when Mr. Elliott first endeavoured to serve the judgment Mr. Hart told him that the company operating the brewery at that time was HRBL. Mr. Elliott was not cross-examined on that evidence by Mr. Hart's counsel.
· On April 19, 2001, Mr. Slavko Ilic toured the Carleton Place brewery. Mr. Ilic testified that the tour was conducted by Mr. Hart who identified himself as the owner of the brewery. Mr. Ilic was not cross-examined on that evidence by Mr. Hart's counsel.
· A coaster provided to Mr. Ilic on the tour depicted both the dragon logo and the name "Dragon's Breath" in connection with a pale ale. The coaster also bore the name "Hart Robinson Breweries Ltd., Carleton Place and Mississauga, Ontario".
· Mr. Ed Palmer, the Director of Distribution of The Brewers Retail Inc. testified that he was familiar with a brewery in Carleton Place and that over its tenure he dealt with Lorne Hart. Mr. Palmer received correspondence dated July 27, 2000 from HRBL advising that effective July 1, 2000 all of the assets and business of THBCL had been purchased by HRBL. Mr. Palmer testified that since that date he dealt with HRBL.
[20] None of Mr. Palmer's evidence was contradicted.
[21] In order to prove knowledge of the judgment on the part of HRBL it is not necessary to prove service of the judgment upon it. Service of the judgment is simply a method of proof of knowledge: see, Apple Computer, Inc. v. Minitronics of Canada Ltd., [1998] 2 F.C. 265 at para. 10.
[22] On this evidence I find as a fact that Mr. Hart was fully involved with the operation of the brewery, and that from December 12, 2000 to at least April 19, 2001 the brewery was being operated by HRBL. I am therefore satisfied beyond a reasonable doubt that Mr. Hart's knowledge of judgment establishes that HRBL knew of the existence of the judgment at least by on or about January 9, 2001.
RESPONSIBILITY FOR THE ALLEGED ACTS OF CONTEMPT
[23] There is no doubt that subsequent to the issuance of the injunction a brewed alcoholic beverage was sold, offered for sale, distributed and advertised in association with the words "Dragon's Breath", the words "Souffle de Dragon" and the dragon design, all as expressly enjoined by Justice O'Keefe. What remains to be considered is the responsibility, if any, of each respondent for that contumacious conduct. I will consider each particular allegation of contempt in order.
(a) On February 15, 2001, HRBL offered for sale to the public and sold ale to Vance Elliott.
[24] Mr. Elliott testified that:
· He bought a mixed case of beer including Dragon's Breath pale ale at the brewery at 175 Industrial Avenue in Carleton Place, where he served a judgment, on what he thinks was January 19, 2001.
· Under cross-examination Mr. Elliott stated that he was not sure of the date on which he purchased the beer, but that it was in early January or early February.
· Mr. Elliott produced a sales receipt stating it was issued by Hart Breweries Ltd. on December 15, 2000.
[25] This evidence does not prove beyond a reasonable doubt, or at all, a sale on February 15, 2001 by HRBL.
(b) and (c) HRBL continued to distribute ale through the LCBO and Brewers Retail Inc. in association with the trademarks. Specifically each week during the period from December 15, 2000 to April 15, 2001 HRBL shipped ale to Brewers Retail Inc. for distribution and sale to the public.
[26] Mr. Palmer testified, and produced a document he had prepared that detailed for the weeks ending December 17, 2000 to April 15, 2001 shipments of 157.5 hectolitres of Dragon's Breath pale ale from HRBL to Brewers Retail Inc. and which further detailed sales of 182.1 hectolitres of Dragon's Breath pale ale through beer stores operated by Brewers Retail. Mr. Palmer also testified that since receipt of the July 27, 2000 letter from HRBL, HRBL was the company that he dealt with in respect of the brewery at Carleton Place.
[27] Mr. Ilic identified a large bottle of Dragon's Breath pale ale he purchased on April 25, 2001 from the Liquor Control Board of Ontario ("LCBO") at 1125 Bloor Street East, Mississauga, and a box of beer marked with the Dragon's Breath logo he purchased on the same date from the Brewers Retail beer store at the same location.
[28] "Hart Breweries Limited Carleton Place Ontario" appears on the label on the large bottle. The box of beer showed the brewery's name to be "Hart Breweries Limited, Carleton Place, Ontario Canada". The labels on the bottles contained in the box referenced "The Hart Brewing Company Ltd. Carleton Place Ontario".
[29] Counsel for the individual respondents tendered, with the consent of counsel for the plaintiff, a letter dated March 13, 2001 from HRBL to counsel for the plaintiff in which HRBL offered to cease bottling and marketing Dragon's Breath beer.
[30] On the basis of the above evidence, coupled with Mr. Palmer's evidence as to who he dealt with after July 27, 2000 with respect to the Carleton Place brewery, I am satisfied beyond a reasonable doubt that the matters alleged in particulars (b) and (c) have been established.
(d) Hart Robinson failed to deliver all articles in its possession which would offend the injunction, and in particular failed to deliver five listed items.
[31] Mr. Ilic testified that he saw the five listed items on his tour of the brewery, and he produced photographs taken by him on that tour of the T-shirt worn by Mr. Hart, the poster with a dragon raising a glass of beer, beer packaging and labelling, the keg tap and the second dragon poster with the words "Caution for Rent Only". Mr. Ilic also identified a case of Dragon's Breath beer that he was given on the tour.
[32] Given the previously referenced evidence which satisfied me that HRBL was operating the Carleton Place brewery at the relevant time, Mr Ilic's evidence satisfies me beyond a reasonable doubt that the acts of contempt alleged in particular (d) were established.
(e) Lorne Hart, a director of HBL, who conducted the business of and was agent for HRBL and who held himself out to be the owner of the brewery, with knowledge of the judgment, directly or indirectly, caused HRBL to do the acts described in particulars (a) through (e).
[33] The plaintiff failed to prove the facts alleged in particular (a). It is therefore not necessary to consider this particular as it relates to Mr. Hart.
[34] With respect to the remaining matters, the evidence was not contradicted that:
· Mr. Hart is a director of HBL.
· On December 12, 2000, when Mr. Elliott endeavoured to serve the judgment on Mr. Hart at the brewery premises, Mr. Hart advised Mr. Elliott that HRBL was operating the brewery.
· On April 19, 2001, Mr. Hart conducted a tour of the brewery and then described himself to be the owner of the brewery.
· At the time of that tour a coaster was provided bearing the name HRBL, the outside signage stated that the premises were the "Home of Hart Breweries Limited", beer cases in shrink wrapping were photographed which bore the offending trademarks and those cases also bore the name "Hart Breweries Limited". The brewery contained the keg handle and posters with the trademarks HBL had been enjoined from using and Mr. Hart himself wore a T-shirt with the Dragon's Breath logo on it. Mr. Ilic was given a box containing bottles of beer bearing the same label as was attached to Justice O'Keefe's order. The label bore the trademarks and named Hart Breweries Limited.
· Mr. Palmer testified:
Q. Do you know about a brewery in Carleton Place called the Hart Breweries?
A. Yes, I do.
Q. Who do you deal with on behalf of Hart Breweries?
A. Over the tenure of Hart Breweries, I would say the majority of the dealings have been with Lorne [Hart]. There was an interim where Lorne was with the company, but mostly dealings were with the fellow that co-signed that contract, Jonathan Hatchell.
[35] Applying reason and common sense to this evidence, and to the absence of challenge or contradiction of that evidence, I am satisfied beyond a reasonable doubt that Lorne Hart conducted the business of the brewery operated by HRBL, that he held himself out to be the owner of the brewery, on at least one occasion, and that he directly or indirectly caused HRBL to do the acts described in particulars (b), (c) and (d).
[36] The inescapable conclusion from the evidence is that Mr. Hart acted in a manner so as to interfere with the orderly administration of justice and to impair the authority of this court. In the result Mr. Hart is liable for contempt of court.
(f) On April 19, 2001 Lorne Hart directly or indirectly caused HRBL to advertise and distribute ale to members of the public, including Slavko Ilic, by conducting a tour wearing a Dragon's Breath T-shirt and giving to Mr. Ilic a case of beer which displayed the label depicted in Justice O'Keefe's judgment.
[37] I accept Mr. Ilic's testimony which proves the actions alleged.
[38] In view of Mr. Hart's admission to Mr. Elliott that HRBL was operating the brewery, Mr. Hart's statement to Mr. Ilic that he was the owner of the brewery, and the distribution of the coaster with its name on it during the tour to Mr. Ilic, I find that Mr. Hart caused HRBL to so act.
(g) Ron Robinson aided and abetted Lorne Hart and HRBL to do the acts described above.
[39] There was no evidence capable of establishing this allegation and it is not apparent on the evidence tendered by the plaintiff as to why this serious allegation was pursued against Mr. Robinson.
PENALTY
[40] As stated earlier in these reasons, the corporate respondent chose not to appear in respect of this proceeding. While Mr. Hart was represented by counsel he chose to adduce no evidence in response to these allegations and so I have no evidence of good faith, or lack of mens rea as those matters relate to penalty.
[41] The evidence before the Court which I consider relevant as to the issue of penalty is as follows.
[42] On March 13, 2001, HRBL wrote to counsel for the plaintiff stating that "we at Hart Robinson Breweries Ltd. would be willing to cease the bottling and marketing of Dragon's Breath beer by March 30, 2001. We would ask for a period of six (6) months to move our inventories through the distribution channels following the cessation".
[43] This offer was apparently not acceptable to the plaintiff.
[44] The show cause order reflects that the respondents were represented before the Associate Senior Prothonotary on March 19, 2001 when the show cause order was issued. Notwithstanding the issuance of that order:
· HRBL continued shipping Dragon's Breath pale ale to Brewers Retail, at least through the week ending April 15, 2001.
· On April 19, 2001, Mr. Hart, dressed in the Dragon's Breath pale ale T-shirt, gave a tour of the brewery to Mr. Ilic and his party. At that time the trademarks were displayed and a case of Dragon's Breath pale ale was given to Mr. Ilic.
· When served with the show cause order and the other order setting the date for the hearing of this matter, Mr. Hart advised Mr. Elliott that he did not think that the matter would go trial because it was not a matter of substance. Mr. Hart was said to have used words to the effect that it was a frivolous matter and that HRBL had asked for bankruptcy protection.
[45] This evidence raises serious concerns.
[46] In all of the circumstances I think it appropriate to afford HRBL and Mr. Hart the opportunity to appear before me, with counsel, and with counsel for the plaintiff, to make any remarks they consider appropriate together with submissions with respect to an appropriate penalty and costs. At this time I will also hear submissions on Mr. Robinson's behalf with respect to costs.
[47] Counsel are therefore directed to advise the Registry within the next ten days as to dates when they and Mr. Hart are available to appear before me in Toronto. Counsel for Mr. Hart is also requested to endeavour to contact his former client, HRBL, so as to ascertain whether that corporation intends to appear, and to in turn advise the Registry within the next ten days as to his efforts in that regard.
"Eleanor R. Dawson"
Judge
Ottawa, Ontario
January 31, 2002
FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
APPEARANCES:
Mr. Adam Bobker Mr. Anthony Cole Bereskin & Parr (416) 364-7311 FOR PLAINTIFF / APPLICANT
Mr. Serge Anissimoff Anissimoff & Associates (519) 673-5591 FOR DEFENDANT/ RESPONDENT
SOLICITORS OF RECORD:
Mr. Adam Bobker Bereskin & Parr (416) 364-7311 FOR PLAINTIFF/APPLICANT
DOCKET: T-1656-00
STYLE OF CAUSE: Desnoes & Geddes Ltd. v. Hart Breweries Ltd.
PLACE OF HEARING: Toronto, Ontario
DATE OF HEARING: September 14, 2001
REASONS FOR Order: the Honourable Madam Justice Dawson DATED: January 31, 2002
Mr. Serge Anissimoff Anissimoff & Associates
(519) 673-5591 FOR DEFENDANT/ RESPONDENT