2021 FC, 2021 FC 1346

Date: 20211202 Docket: T-646-15 Citation: 2021 FC 1346 Ottawa, Ontario, December 2, 2021 PRESENT: Madam Justice Pallotta BETWEEN: CANADIAN STANDARDS ASSOCIATION Applicant and P.S. KNIGHT CO. LTD. AND GORDON KNIGHT Respondents ORDER AND REASONS I. Introduction [ 1 ] In a decision dated July 20, 2021 ( Canadian Standards Association v P.S. Knight Co Ltd , 2021 FC 770 ), I found Mr. Gordon Knight and his companies, P.S. Knight Co.

Ltd. (Knight Co.) and PS Knight Americas Inc. (Knight Americas) (collectively referred to as the Knight Parties) guilty on three counts of contempt of court for breaching the terms of judgments in Canadian Standards Association v P.S. Knight Co Ltd , 2016 FC 294 and Canadian Standards Association v P.S. Knight Co Ltd , 2016 FC 387 (collectively referred to as the Judgment). The contempt proceeding was bifurcated, to deal separately with the appropriate penalty: Winnicki v Canada (Human Rights Commission) , 2007 FCA 52 .

These reasons deal with the appropriate penalty for the Knight Parties’ contempt. [ 2 ] The Knight Parties did not appear at the penalty hearing held by videoconference, and they did not file written submissions on penalty. Despite being aware of the July 20, 2021 decision, which stated that the Court would set a date for the penalty hearing, the Knight Parties ceased communicating with the Court. Prior to the penalty hearing, the Knight Parties were served with copies of affidavit evidence that Canadian Standards Association (CSA) proposed to tender at the hearing.

At the hearing, the affidavit evidence was marked as exhibits, subject to the condition that the affiant would remain present and available to be cross-examined should Mr. Knight join. Mr. Knight did not join. Penalties have been imposed despite the contemnor’s failure to attend before the Court, including being sentenced to imprisonment: Telewizja Polsat SA v Radiopol Inc , 2006 FC 137 ; Trans-High Corp v Hightimes Smokeshop and Gifts Inc , 2015 FC 1104 . II.

CSA’s Submissions [ 3 ] CSA submits that in view of the nature of the acts of contempt, which represent flagrant, serious, and intentional violations of the Judgment, an appropriate penalty in this case would include both a fine and imprisonment. [ 4 ] CSA submits that a fine of $100,000 should be imposed against the Knight Parties, jointly and severally. [ 5 ] CSA submits it is appropriate to sentence Mr. Knight to imprisonment for six months, with the Court remaining seized of the matter and retaining the power to impose additional sanctions if warranted. CSA contends that a prison sentence against Mr.

Knight should be suspended for a period of ten days in order to permit the Knight Parties a final opportunity to purge their contempt by fully complying with the Judgment and paying all fines and cost awards in full, failing which a warrant may be issued for his arrest. Upon arrest, Mr. Knight may be brought before the Court to show cause why the term of imprisonment should not be imposed. III. Analysis A. Background [ 6 ] The Knight Parties were charged with three counts of contempt for disobeying terms of this Court’s Judgment issued in a copyright infringement proceeding.

The Judgment declared that Knight Co. had infringed CSA’s copyright in a 2015 edition of the Canadian Electrical Code,

Part I (2015 CSA Code). Knight Co. was ordered to deliver up to CSA all copies of its infringing publication (Knight Code).

Knight Co., its officers, directors, employees, and any related companies under its control were permanently enjoined from reproducing, distributing, or selling the Knight Code, or otherwise doing any act to contravene CSA’s copyright in the 2015 CSA Code, without CSA’s express written permission. [ 7 ] In addition, the Judgment ordered Knight Co. to pay statutory damages in the amount of $5,000 in respect of past acts of infringement, and CSA’s costs of the proceeding in the amount of $96,336. [ 8 ] The Judgment was affirmed by the Federal Court of Appeal: P.S.

Knight Co Ltd v Canadian Standards Association , 2018 FCA 222 . The Supreme Court of Canada denied leave to appeal: P.S. Knight Co Ltd et al v Canadian Standards Association , 38506 (23 May

2019). [9] At the liability hearing for contempt, CSA had alleged that, at least since October 2020, Knight Co. and Mr. Knight werereproducing, distributing, and selling infringing Knight Code publications through a newly incorporated entity, Knight Americas,contrary to the terms of the Judgment. CSA alleged that the Knight Parties were deliberately disobeying the injunction, engaging in a badfaith pattern of behaviour to evade their obligations under the Judgment, and attempting to avoid the jurisdiction of this Court by carryingon infringing activities through Knight Americas. [10] The Knight Parties raised four points in defence: (

i) the injunction is restricted to the 2015 edition of the Knight Code and does not enjoin later editions of the Knight Code; (ii) only Knight Co. was found liable for copyright infringement; therefore, Mr. Knight and Knight Americas cannot be held incontempt of the Judgment; (iii) the Knight Parties have not contravened CSA’s copyright in the 2015 CSA Code without CSA’s permission because: (

a) theCSA Code has been incorporated into law and may be freely reproduced without infringing copyright; and (

b) a written agreementbetween the respondents and CSA permits the Knight Parties to reproduce and sell copies of the CSA Code, or at least the 2018edition of the CSA Code; and (iv) the Knight Code is now published by Knight Americas in the United States, which is beyond the jurisdiction of this Court andthe Judgment. [11] At the liability stage of the contempt proceeding, I found each of the Knight Parties guilty of contempt of court on all counts withwhich they were charged.

For the reasons explained in my decision, I was satisfied that the evidence established beyond a reasonabledoubt that the Knight Parties knowingly breached the terms of the Judgment, and the defences raised by the Knight Parties did notexcuse the breach: Canadian Standards Association v P.S. Knight Co Ltd, 2021 FC 770. B. Penalty [12] Contempt of court is a serious matter. It is a challenge to the judicial authority whose credibility and efficiency it undermines aswell as those of the administration of justice: 9038-3746 Quebec Inc v Microsoft Corporation, 2010 FCA 151 at para 18.

The rule of lawis directly dependent on the ability of the courts to enforce their process and maintain their dignity and respect: Carey v Laiken, 2015SCC 17 at para 30 [Carey], citing United Nurses of Alberta v Alberta (Attorney General), (SCC), [1992] 1 SCR 90 at931, [1992] 3 WWR 481. [13] In civil contempt, the matter is seen "“primarily as coercive rather than punitive”": Carey at para 31. Generally, the court seeks tobring the offending party into compliance with its legal obligations.

Nonetheless, one purpose of sentencing in civil contempt ispunishment for breaching a court order, and as such, courts may impose substantial fines to match the gravity of the contempt and todeter the contemnor’s continuing conduct: Ibid. [14] Rule 472 of the Federal Courts Rules, SOR/98-106 [FC Rules] provides as follows: 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. [15] As summarized in Minister of National Revenue v Marshall, 2006 FC 788 at paragraph 16, relevant factors to consider whendetermining a sentence in contempt proceedings are: (

i) The primary purpose of imposing sanctions is to ensure compliance with orders of the court.Specific and general deterrence areimportant to ensure continued public confidence in the administration of justice; (ii) Proportionality of sentencing requires striking a balance between enforcing the law and what the Court has called"“temperance of justice”"; (iii) Aggravating factors include the objective gravity of the contemptuous conduct, the subjective gravity of the conduct (i.e.whether the conduct was a technical breach or a flagrant act with full knowledge of its unlawfulness), and whether the offenderhas repeatedly breached orders of the Court; and (iv) Mitigating factors might include good faith attempts to comply (even after the breach), apologize or accept responsibility, orwhether the breach is a first offence. [16] In order to determine the appropriate sentence in a particular case, the sentencing judge must consider the range of sentences for

similar offences set out in prior jurisprudence and adjust the sentence depending on the objectives of sentencing and any aggravating and mitigating factors applicable to the case at hand: Warman v Tremaine , 2014 FCA 192 at para 21 . [ 17 ] Any profit made from the contemptuous conduct is also a relevant consideration: Canadian Copyright Licensing Agency v U- Compute , 2005 FC 1644 at para 76 . [ 18 ] CSA submits there are numerous aggravating factors that are relevant to setting an appropriate penalty in this case, including that the Knight Parties: (

i) are acting in flagrant disregard for the injunctive and mandatory terms of the Judgment; (ii) profit from their acts, and have not paid to CSA the monetary awards of prior judgments; (iii) know that they are violating the Judgment, and have purposely chosen to disobey; (iv) have been in contempt for a lengthy period of time; (

v) have made public attacks on the Court, its judicial officers, CSA, and CSA’s counsel; and (vi) publicly state they are copying copyright-protected publications of CSA for the purpose of retaliation. [ 19 ] More specifically, the evidence that CSA introduced at the penalty stage establishes the following aggravating factors: (

i) the Knight Parties were found guilty on all three charges of contempt, for carrying out acts prohibited by the Judgment and for failing to carry out acts compelled by the Judgment; (ii) the Knight Parties’ decision to resume sales of the Knight Code in October 2020, and the failure to deliver up all copies of the publication as required by the Judgment, were deliberate acts committed with full knowledge of the terms of the Judgment; while there is no requirement to establish " “contumacious” " intent in order to make a finding of contempt, the evidence that was led at the liability hearing established that the Knight Parties acted with contumacious intent by choosing to disobey the Judgment—the Knight Parties knew and publicly acknowledged that further sales of their publication would be unlawful; (iii) the Knight Parties made no attempt to comply with other aspects of the Judgment, including payment of damages and costs amounting to over $100,000; (iv) CSA made repeated efforts to resolve the matter without resorting to contempt proceedings; (

v) throughout this contempt proceeding, and via his online posts and other communications, Mr. Knight has shown disrespect for CSA, its counsel, and the Court; (vi) Mr. Knight openly and publicly details his activities, attempting to justify them by alleging that the Court and CSA are corrupt and engaged in a conspiracy to harm his business; (vii) the acts of contempt have been continuing for over one year; (viii) Mr. Knight made statements on the record at the liability hearing to the effect that no matter what the Court decided, he would ignore the order; (ix) the acts of contempt continued after the Knight Parties were found to be in contempt of court; (

x) Mr.

Knight is aware of the contempt order, and wrote articles about the contempt trial and order which he posted to his website; (xi) the Knight Parties escalated their activities since this Court found them to be in contempt of court, publicly stating that they are now selling their own copies of additional CSA publications in retaliation for CSA’s efforts to enforce the Judgment, and that they are " “just getting going” " ; (xii) the Knight Parties have gone to great lengths to attempt to avoid the Judgment and the Court’s authority, including by stating that they have relocated to the United States and transferred assets to the US corporation Knight Americas, and by stating they could avoid the jurisdiction of this Court by shielding their activities through Knight Americas; and (xiii) after their previous website host disabled the Knight Parties’ website, Mr.

Knight moved the content to a new hosting service and reactivated the website; the new hosting service advertises that they provide " “offshore and anonymous web hosting services” " and that they " “ignore the DMCA and takedown requests” " (DMCA refers to the United States Digital Millennium Copyright Act , which includes a process for requesting that an internet service provider remove content on websites that is alleged to infringe copyright). [ 20 ] A number of the aggravating factors above are very serious, including the Knight Parties’ open and public defiance of a court order for over a year, and a demonstrated escalation of the Knight Parties’ contumacious conduct after being found in contempt.

In my view, imposing a fine of $100,000 and sentencing Mr. Knight to a prison term of not less than six months are necessary in view of the gravity of the offence. [ 21 ] CSA argues that there are no mitigating factors, and this is not a case deserving of leniency. The Knight Parties have never apologized or shown remorse. The Knight Parities have never made good faith or sustained efforts to comply with the Judgment. Indeed, CSA submits that partial, reluctant compliance with the Judgment between the time Knight Co. and Mr.

Knight’s application for leave to appeal to the Supreme Court of Canada was dismissed in May 2019, and the Knight Parties’ resumption of sales in October 2020, should be considered an aggravating factor: Professional Institute of the Public Service of Canada v Bremsak , 2013 FCA 214 at para 54 . Nonetheless, CSA proposes leniency, both by providing a final opportunity for the Knight Parties to comply, and flexible terms that would allow the Court to exercise leniency with respect to Mr.

Knight’s prison term, if the circumstances so require. [ 22 ] I have not been presented with any evidence to indicate that the Knight Parties are unable to pay the amounts that they have been ordered to pay. The evidence before me shows that Mr. Knight has stated in his online posts that he transferred Knight Co.’s assets to

Knight Americas. This appears to be an attempt to shelter Knight Co.’s assets so as to avoid paying the amounts owing to CSA. [ 23 ] While I have not been presented with any mitigating factors that would support a lenient penalty, I find it is appropriate to suspend the term of imprisonment for ten days in order to provide the Knight Parties a final opportunity to purge their contempt and fully comply with the Judgment. Furthermore, the Court will remain seized of the matter. By doing so, there will be an opportunity to exercise leniency if the circumstances so require. Mr.

Knight will be afforded an opportunity on arrest to show cause why he should not be imprisoned for six months. In addition, the order will include a term that allows Mr.

Knight to apply for his release if he is able to demonstrate compliance with the injunctive and mandatory terms of the Judgment, as well as full payment of all damages, fines, and costs owing under the Judgment and under this order, or satisfactory proof of a plan to pay all such amounts within a reasonable period of time. [ 24 ] When a person is found in contempt, Rule 472 of the FC Rules authorizes the Court to impose a prison sentence of less than five years. Mr. Knight’s persistent acts of contempt and his open and public defiance of the Judgment warrant a minimum prison term of six months, and thereafter Mr.

Knight shall remain imprisoned until the Knight Parties have purged their contempt, up to a maximum sentence of five years less one day. The sentencing order will incorporate flexible terms that will allow the Court to exercise leniency or impose additional sanctions, as the circumstances require. [ 25 ] In my view, the foregoing terms recognize the gravity of the offence, including the Knight Parties’ open and public defiance of a court order for over one year, and a demonstrated escalation of the Knight Parties’ contumacious conduct after being found in contempt. At the same time, the terms will ensure that Mr.

Knight’s prison term is limited to one that is commensurate with the offence, and what is required to bring the Knight Parties into compliance with their legal obligations. [ 26 ] CSA seeks its costs of this contempt proceeding on a solicitor and client basis, as a lump sum award of $50,000 payable forthwith: Canadian Copyright Licensing Agency v U-Compute , 2007 FCA 127 at para 38 ; Trans-High Corporation v Hightimes Smokeshop and Gifts Inc , 2015 FC 919 at para 35 ; Brilliant Trading Inc v Wong , 2005 FC 1214 at para 20 . I am satisfied that the cost award is appropriate in this case.

ORDER in T-646-15 THIS COURT ORDERS that: 1 . Knight Co., Knight Americas, and Mr. Gordon Knight are hereby fined $100,000, which they shall pay directly to CSA within ten days of the date of this Order; the fine is imposed jointly and severally and may be paid by any of the Knight Parties or any combination of the Knight Parties. 2 . Mr. Gordon Knight is sentenced to a term of imprisonment for a period of not less than six months, and shall remain imprisoned until the Knight Parties have purged their contempt, up to a maximum sentence of five years less one day. 3 .

If the Knight Parties purge their contempt within ten days of the date of this Order, to the Court’s satisfaction, the prison sentence in paragraph 2 will be suspended. 4 . If the Knight Parties fail to demonstrate that they have purged their contempt within ten days of the date of this Order, a warrant of committal shall be issued for Mr. Knight.Upon arrest, Mr.

Knight shall be brought before a Judge of this Court and afforded an opportunity to show cause why he should not be imprisoned for the period provided by paragraph 2 of this Order, failing which he shall be committed to jail in accordance with this Order. 5 . At any time after Mr. Knight has served six months of the prison sentence in paragraph 2 of this Order, or such other minimum sentence imposed by a Judge of this Court, Mr. Knight shall be at liberty to apply for an order for his release on the basis that the Knight Parties have purged their contempt. 6 .

To support a request for release, the Knight Parties may serve and file evidence to demonstrate that they have purged their contempt by: a . complying in all respects with the Judgment, including by: (

i) ceasing all acts of reproduction, distribution, sale or promotion of any publication that contravenes CSA’s copyright in the 2015 CSA Code, whether by themselves or any other officer, director, employee or company related to any of them; (ii) delivering up to CSA, at the Knight Parties’ expense, all print, electronic, or other copies of any publication that contravenes CSA’s copyright in the 2015 CSA Code; and (iii) paying to CSA the amounts awarded as statutory damages and costs, including any interest accrued thereon; b . undertaking to abide with the Judgment going forward; and c . paying all fines and costs ordered to be paid to CSA in this Order. 7 .

If the Knight Parties purge their contempt in all respects except the payment in full of all monetary damages, fines, and costs owing to CSA, the Court may order Mr. Knight’s release if the Knight Parties demonstrate to the Court’s satisfaction that they are unable pay the part of such monetary amounts that remains outstanding. 8 . If any of the Knight Parties (or any related party) acts in contravention of the Judgment after the date of this Order, whether before or after Mr.

Knight serves any term of imprisonment, CSA shall be at liberty to seek additional penalties from any Judge of this Court that the Judge considers to be just and appropriate; if considered just and appropriate, the Judge may issue a further warrant and re-commit Mr. Knight to prison, provided that his cumulative sentence does not exceed five years less one day.

9 . Within ten days of the date of this Order, the Knight Parties shall pay CSA’s costs of these contempt proceedings to date (including the show cause motion) forthwith on a solicitor-client basis, fixed in the lump sum amount of $50,000 which is inclusive of legal fees, disbursements, and taxes thereon; the cost award is imposed jointly and severally and may be paid by any of the Knight Parties or any combination of the Knight Parties. 10 . This Court shall remain seized of this matter to address any issue arising from the terms of this Order. "Christine M.

Pallotta" Judge FEDERAL COURT SOLICITORS OF RECORD DOCKET: T-646-15 STYLE OF CAUSE: CANADIAN STANDARDS ASSOCIATION v P.S. KNIGHT CO. LTD. AND GORDON KNIGHT PLACE OF HEARING: HELD BY WAY OF VIDEOCONFERENCE DATE OF HEARING: October 4, 2021 ORDER AND REASONS: PALLOTTA J. DATED: December 2, 2021 APPEARANCES : Kevin Sartorio James Green Harvey Lim For The Applicant N/A For The Respondents SOLICITORS OF RECORD : Gowling WLG (Canada) LLP Barristers and Solicitors Toronto, Ontario For The Applicant