In an unusual, but not unexpected turn of events, the Federal Court of Canada recently ordered that the officer and director of a party who failed to comply with a contempt order be imprisoned until all amounts owing under orders of the Court are paid.
In November 2013, Justice Manson held the Respondent in Trans-High Corporation v Hightimes Smokeshop and Gifts Inc had infringed the Applicant’s trademark “HIGH TIMES” by operating a store as “High Times Smokeshop and Gifts”, and using “HIGH TIMES” in a font similar to the Applicant’s on signage. He ordered the Respondent to pay $25,000 in damages and $30,000 in costs, in part because of the Respondent’s wilful infringement and failure to participate in or acknowledge the proceedings (see here for an analysis of the judgment). Despite awareness of the judgment, which enjoined the Respondent from using the Applicant’s trademark, the Respondent continued to use the mark and paid none of the monies owing under the judgment.
Earlier this year, after much negotiation and leniency on the part of the Applicant regarding payment of the outstanding funds, it sought a contempt order. The Respondent and its officer and director pleaded guilty, and were ordered to pay the costs of the motion and contempt hearing, a fine, and the original sum owing under Justice Manson’s judgment. Despite acknowledgement of the contempt order by the Respondent, no payment was made.
Recently, the Applicant brought an ex parte motion for enforcement of the contempt order, specifically seeking that the officer and director of the Respondent be imprisoned pursuant to Rule 472 of the Federal Courts Rules until he complies and pays the monies owed under the Court’s orders.
Justice Fothergill observed that while “a person who is ordered by a court to pay money to another cannot be imprisoned for contempt if he or she is unable to pay the debt”, as “debtors’ prison… is a Dickensian concept that in civilized countries has largely been abolished”, the Supreme Court of Canada has held that a person may be imprisoned for contempt where he demonstrates an intention to dodge his commitments (e.g. having the ability to pay a debt but refusing to do so).
In view of the goals of ensuring compliance with court orders and maintaining public confidence in the administration of justice, Justice Fothergill granted the motion for a warrant of committal. He concluded that the officer and director “is not subject to imprisonment as a result of the unpaid debt, but rather for his deliberate refusal to comply with the Contempt Order despite his ability to do so.” The Respondent presently owes the Applicant in excess of $170,000.
While the Federal Court1 has ordered, and the Federal Court of Appeal2 has upheld, jail sentences for breaches of intellectual property judgments, such sentences for contempt are uncommon.