RULING #2 OF THE HONOURABLE MR. JUSTICE COHEN - Full Copy
By: DD_Fact_Finder
Reply To: None
Saturday, 24 Apr 1999 at 7:57 PM EDT
Post # of 687
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Here for your information is the full copy of Justice Cohen's Ruling for the continued contempt of court by the Thermo Tech Defendants.
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Date: 19990422
Docket: C976669
Registry: Vancouver
IN THE SUPREME COURT OF BRITISH COLUMBIA
BETWEEN:
TROOPER TECHNOLOGIES INC. and INTERNATIONAL ECO-WASTE SYSTEMS S.A.
PLAINTIFFS
AND:
THERMO TECH TECHNOLOGIES INC., THERMO TECH WASTE SYSTEMS INC., LOCKERBIE & HOLE LTD. and
LOCKERBIE THERMO TECH INC.
DEFENDANTS
RULING #2 OF THE HONOURABLE MR. JUSTICE COHEN
Counsel for the plaintiffs: D. Lunny
Counsel for the Defendants: N.P. Kent
Counsel for Mr. Branconnier & Dr. Cumming: R. Switzer
Date and Place of Hearing: April 1, 1999 Vancouver, B.C.
[1] In my Ruling dated July 10, 1998, I decided that a substantial fine for contempt was appropriate. I imposed a fine in the amount of $25,000 against each of the Thermo Tech defendants. However, payment of the fine was suspended for a period of one week from the date of the Ruling on the condition that within that time the Thermo Tech defendants comply with my Order granted January 20, 1998, which provided that all standard certified engineering specifications, including design drawings, regarding thermophilic plants in the possession of control of the Thermo Tech defendants be delivered to the plaintiffs forthwith. The defendants failed to comply with the Ruling and did not pay the fine until the eve of the hearing of this application.
[2] This application is brought by the plaintiffs pursuant to Rule 56 for the imposition of punishment for contempt by the Thermo Tech Defendants and two of their individual officer and directors for their failure to comply with the Order granted January 20, 1998. The issues before me are as follows:
(I) What is the appropriate additional punishment for the Thermo Tech defendants' contempt of the January 20, 1998, Order beyond the fine imposed by the ruling of July 10, 1998, bu virtue of their non-compliance with that Ruling and their continued contemp?
(II) Whether the Court should find Mr. Branconnier and Dr. Cumming in contempt?
[3] The plaintiffs submit that the evidence contained in the affidavits in support of their application is entirely uncontradicted by the Thermo Tech defendants and demonstrates that, following the July 10,1998, Ruling, the Thermo Tech defendants once more chose to manufacture a bogus compliance with the Order of January 20, 1998, rather than comply with it properly.
[4] In his affidavit sworn July 29, 1998, Mr. Stan Lis, President of the plaintiff Trooper Technologies Inc., and President of the Supervisory Board of the plaintiffs, International Eco-Waste Systems S.A., deposed, inter alia, as follows:
13. I have reviewed said package of materials and I verily believe that they don not contain all of the Technical Information. While said materials do include the drawings prepared by Dick Engineering Ltd., which I reviewed on November 18, 1997 at the offices of Lockerbie Thermo Tech in Edmonton Alberta, I note that these drawings and its accompanying materials have been heavily edited and do not enable the Plaintiffs to build thermophilic plants. Further, these materials do not contain the other drawings and standard certified engineering specifications referred to in the Defendants' pleadings and affidavits.
14. Further, the remaining materials in the package that Thermo Tech delivered to the Plaintiffs on July 17, 1998, contain materials that were specifically prepared for the Plaintiffs and that were not even in existence in January, 1998.
15. Despite being found in contempt of Court, Thermo Tech has not delivered the Technical Information to the Plaintiffs, and has acted as if it has purged its contempt of the Order. The package that Thermo Tech delivered to the Plaintiffs does not include any useful information, let alone all of the Technical Information. As of the date hereof, the Plaintiffs are no closer to building thermophilic plants than they were in January, 1998. Despite this, Thermo Tech has announced to the world that it has
complied with the Order. Attached hereto and marked as Exhibit "M" is a true copy of the Plaintiff's new release, dated July 17, 1998, the contents of which are true, Attached hereto and marked as Exhibit "N" is a true copy of Thermo Tech's news release, dated July 24, 1998.
16. The materials attached indicate Thermo Tech, its President, Mr. Rene Branconnier and its director, Dr. Daniel Cumming, are well aware of the terms of the Order and of the Contempt Order. All subsequent communications indicate that they intend to remain in contempt and ignore the Order.
17. I verily believe that Thermo Tech's directors and President are deliberately causing Thermo Tech to breach the Order. The directors of Thermo Tech are fully aware that because of the anticipated changes to Poland's environmental laws, time is of the essence for the Plaintiffs. The Plaintiffs must receive the opportunity to construct thermophilic plants in Poland. By causing Thermo Tech to flagrantly breach the Order, I believe that its directors and President are deliberately trying to cause the Plaintiffs irreparable harm.
18. As a result of Thermo Tech's continued breach of the Order, the Plaintiffs are contemplating laying off most of its employees in Canada and Poland. As of the date hereof, the Plaintiffs have already laid off two of their employees. It is clear tome that if Thermo Tech does not comply with the Order forthwith, the Plaintiffs may be prevented from constructing thermophilic plants in Poland and may cease to be viable as a going concern.
[5] In his affidavit sworn August 19, 1998, Mr. J.D. Hole, an Officer and Director of the defendants Lockerbie and Hold Ltd. And Lockerbie Thermo Tech Inc., deposed, inter alia, as follows:
7. Based upon my personal knowledge, I am able to state unequivocally that the materials which constitute Exhibit "A" are only
a portion of the total volume of engineering specifications and drawings which have been put in the possession of our company by Thermo Tech and its consulting Engineers.
8. Specifically, the materials which constitute Exhibit "A" are only a portion of the engineering specifications and drawings produced by Dick Engineering, with which I am personally familiar. Further, it appears that the materials which constitute Exhibit "A" are edited versions of the aforementioned specifications and drawings so as to remove details which would normally be provided for construction. The materials provided in Exhibit "A" would be insufficient to construct a plant.
9. Based upon my own knowledge, I am able to state unequivocally that the materials which constitute Exhibit "A" do not include all of the engineering specifications and drawings either referred to in my own previous Affidavits filed herein or referred to by the Honourable Mr. Justice Cohen in the Reasons for Judgment, dated January 20, 1998, at paragraphs 10 through 15, and in the Reasons for Judgment, dated July 10, 1998, at paragraphs 32 through 34.
10. I can also attest that the materials which constitute Exhibit "A" are quite distinct from and only a portion of the engineering specifications and drawings utilized by Thermo Tech itself in tendering for the construction of their thermophilic plants. The latter engineering specifications and drawings were sent out to numerous contractors, including our firm, as part of the tender package for the construction of the new plant in Richmond, British Columbia
[6] In his affidavit sworn August 21, 1998, Mr. Harland Kelly, a Consulting Engineer retained by the Plaintiff Trooper Technologies Inc. to review materials issued on July 16, 1998, by Dick Engineering Ltd, deposed, inter alia, as follows:
5. The Materials incorporated preliminary information regarding the construction of a thermophilic waste food processing facility. Upon my thermophilic waste food processing facility. Upon my review of them, it is obvious that considerable detail has been removed from the provided drawings such that an understanding of the total thermophilic process is not achievable. Further, it is obvious that the Materials are wholly insufficient to construct an operable thermophilic plant.
6. From my review of the drawings contained in the Materials, it is apparent that the mechanical general arrangement drawings do not indicate the means of handling raw product or the finished product. Further, there are no odour handling drawings, no electrical or instrumentation drawings, no structural drawings, no heating ventilating ("HVAC") drawings and no general drawings to describe product flow and standards, all of which one would expect to be part of the standard certified engineering specifications, including drawings. I am able to state, without hesitation, that such mechanical and process drawings as are contained in the Materials are incomplete and that necessary information has been removed from them.
7. The written specifications that are contained in the Materials do not provide sufficient written descriptions of the requirements of a thermophilic plant and it is obvious that specific written descriptions of HVAC, odour control, structural equipment, electrical, instrumentation and control specifications have again been omitted. Some of these omissions are readily apparent whereas others are more subtle. For example, the specifications contained in the Materials reference equipment in motor lists that do not appear in the mechanical list.
8. Further, based on the removal of key information from the Materials, I verily believe that unless a full and complete set of drawings are provided, the Plaintiffs will remain unable to construct and operate a thermophilic plant.
[7] Plaintiff's counsel submitted that Mr. Hole's evidence put it beyond any shadow of doubt that the Thermo Tech defendants remained wilfully and knowingly in contempt despite their purported compliance on July 17, 1998. He contended further that the Thermo Tech defendants' conduct in not delivering up the materials after July 10, 1998, evidenced a continuous and fresh contempt, not at all addressed by the fined imposed by the July 10, 1998, Ruling.
[8] Counsel for the Thermo Tech Defendants submitted that the purpose of contempt proceedings is two-fold; first, and foremost, the court seeks to ensure that there is compliance with its orders. Second, and less importantly, the court may punish the parties who have failed to comply with its orders. See Apotex Fermentation Inc. v. Nonopharm Ltd. (1998), 42, C.C.L.T. (2d) 133 (Man. C.A.) At pp. 201-202.
[9] The Thermo Tech Defendants' counsel submitted that the primary purpose of contempt proceedings, that is, compliance with the January 20, 1998 Order, has already been achieved. He said that, in the result, the secondary purpose of punishment becomes unnecessary. He contented further that the punishment imposed should take into account the fact that the Thermo Tech defendants were relying on legal advice through this proceeding. He claimed that reliance on legal advise can be considered a mitigating factor in considering the appropriate punishment for a finding of contempt. See Glazer v. Union
Contractors Ltd. (1960), 34 W.W.R. 193 (B.C.C.A.)
[10] Defendants' counsel said that another mitigating factor which bears on the appropriate punishment is whether the contemnor has acknowledged his contempt and mad a full apology in accordance with the gravity of the contempt. In this respect he referred to the affidavit of Mr. Wayne Hansen. In his affidavit sworn October 19, 1998, Mr. Hansen, Chief Financial Officer for the defendant Thermo Tech Technologies Inc., deposed as follows:
5. In order to comply with Mr. Justice Cohen's Order of July 10, 1998, Thermo Tech's former solicitors, O'Neill & Company, obtained additional engineering documentation from Dick Engineering Inc. These documents were delivered by O'Neill & Company to the solicitors for Plaintiffs on July 17, 1998. I did not personally review the additional Dick Engineering documents, however, I assumed our solicitors had taken all necessary steps to fully comply with Mr. Justice Cohen's Order and to purge any contempt that may have existed.
6. I was shocked when I learned at the end of July 1998 that the Plaintiffs' were bringing yet another contempt application, again asserting that the Thermo Tech Defendants had not made proper production of documents. I had become increasingly concerned about the manner in which our former solicitors were handling the defense of the claim and this second contempt application was the straw that broke the camel's back. My concerns included.
• The fact that summary judgement of some sort had been obtained by a Plaintiff, International Eco-Waste Systems, S.A., who was not even a party to the License Agreement that was the subject matter of the proceedings.
• The fact that summary judgment of some sort had been granted against a Defendant (Thermo Tech Technologies Inc.) Who
was also not a party to the License Agreement.
• The fact that the from of summary judgment granted by Justice Cohen was apparently based on admissions in the Statement of Defence and contradictory Affidavit evidence filed on behalf of the Thermo Tech Defendants;
• the fact that large portions of potentially relevant evidence (the Liebowitz Affidavit of May 19, 1998) were ruled inadmissible on grounds that the information was raised too late and was in any event framed as simply argument or hearsay evidence;
and
• the manner in which production of documents had been handled such that the Thermo Tech Defendants were eventually found in contempt.
7. In the result, I decided at the end of July 1998 that a change of legal counsel was necessary and at that point I retained the Clark, Wilson firm to assume the further defence of the litigation on behalf of the Thermo Tech Defendants.
...
9. Since their retained, Clark, Wilson has visited the Thermo Tech offices to review documents and has met with Dick Engineering in Toronto for the same purpose. They have collected and produced to the solicitors for the Plaintiffs all of the engineering documents produced by Dick Engineering Inc. as well as other engineering firms respecting the Thermo Master Plants operated or licensed by the Thermo Tech Defendants. The two lists of additional engineering documents produced to the solicitors for the Plaintiffs in that regard are attached to this Affidavit and marked collectively as Exhibit "C".
10. On behalf of the two Thermo Tech defendants, I unconditionally apologize to Mr. Justice Cohen, the Court and to both
Plaintiffs for failing to comply with the Orders issued by Mr. Justice Cohen on January 20, 1998 and July 10, 1998. I assure the Court that the Thermo Tech Defendants will make full and frank disclosure of all relevant documents in this lawsuit and will fully comply, without delay, with any further Orders that may be granted in this litigation.
[11] Counsel submitted that the Thermo Tech Defendants have made a full and unconditional apology to the court as well as confirmed that ll further orders will be complied with. He said that the apology is sincere and, in all the circumstances, should be accepted by the court and mitigate any punishment meted out to the Thermo Tech Defendants. See. Attorney General for Ontario v. Paul Magder Furs Ltd. (1993), 12 O.R. (3d) 72, (Gen Div.).
[12] Counsel argued finally, that it must be noted that the July 10, 1998, Ruling itself provided for the punishment to be levied in the event of non-compliance, namely, fines in the aggregate amount of $50.000. He submitted that the punishment for contempt has therefore already been determined and, indeed payment of the fine tendered. He said that it was therefore completely unnecessary for the plaintiffs' application to have been prosecuted further. He also contended that the fact that the Thermo Tech defendants were not seeking a return of their $50,000 payment reinforced the sincerity of their apology to the court.
[13] I think it is necessary to reject the defence position. Rather, I find myself in agreement with plaintiff's counsel's position that the purported compliance by the Thermo Tech defendants following the July 10, 1998, Ruling was little more than a repeat, in a different guise, of the original purported compliance, which the court rejected as constituting compliance with the January 20, 1998, Order.
[14] In his letter to plaintiffs' counsel dated July 17, 1998, then counsel for the Thermo Tech Defendants wrote, as follows:
Attached hereto please find one complete set of the Standard Certified Engineering Specifications of Dick Engineering for the Thermophilic Aerobic Fermentation Process, together with one binder containing Construction Specifications and one binder containing Equipment and Material Specifications.
In addition, we enclose a letter from Donald Dick, P. Eng., President of Dick Engineering, certifying you now have received all of the certified engineering specifications and drawings. We trust your client will now be content with this production which, in fact, goes beyond that ordered by Justice Cohen and includes the equipment and Material Specifications.
[15] Further, a News Release dated Friday, July 24, 1998, issued on behalf of the Board of Directors of the defendant Thermo Tech Technologies Inc. by Mr. Rene J. Branconnier, President and C.E.O., stated, as follows:
Therm Tech (TM) Technologies Inc. (the" Company") announced today, that on July 17, 1998, it satisfied the court order of Honourable Justice Cohen to deliver a complete package of plant engineering drawings and specifications to Trooper Technologies, Inc. (TPPV) pursuant to the license agreement between Therm Tech (TM) Waste Systems Inc. and Acumen Waste Services of Canada, Inc. (Later assigned to Trooper Explorations, Ltd.). Despite Thermo Tech (TM's) efforts to stay the delivery of these documents because the stated license agreement was terminated between the two companies as reported
in the Company's new release of May 26, 1998, Thermo Tech (TM) has nonetheless complied with the order and is confident that the materials delivered meet or exceed the terms of the disputed agreement.
[16] Notwithstanding the above correspondence and the News Release, the evidence is plain. Not only did the Thermo Tech defendants not comply with the July 10, 1998, Ruling, they substantially postponed compliance and payment of the fines for non-compliance.
[17] Insofar as the apology contained in Mr. Hansen's affidavit is concerned, his apology does not serve to mitigate the circumstances. I agree with plaintiffs' counsel that it is not Mr. Hansen who should provide the court with an apology, rather the apology should come from those responsible for the now admitted contempt of the court's Order and Ruling. For the apology to be sincere, particularly in light of the circumstances of this case,,, it should be delivered by those responsible for the non-compliance, in a timely manner. This did not happen. Further, although Mr. Hansen, who himself has nothing to apologize for, decided at the end of July to instruct new counsel to ensure compliance with the court's Order, he did not swear his affidavit containing the apology until October 1998, and, as already mentioned, the Thermo Tech defendants' fines were not paid until the eve of the hearing of this application.
[18] In the result, I agree with plaintiffs' counsel that the fines imposed against the Thermo Tech defendants in the July 10, 1998, Ruling are not sufficient given the continued non-compliance by the Thermo Tech defendants. In my opinion, there has to be a further imposition of fines against them.
[19] With respect to whether Mr. Branconnier and Dr. Cumming should be held in contempt, I don not think the evidence on
this issue meets the high standard of proof required for a find of contempt. The evidence in support of this part of the plaintiffs'
application comes, essentially, from paragraph 17 of Mr. Lis' affidavit and the News Release.
[20] From this evidence, plaintiffs' counsel argued that the court could make the inescapable inference that Mr. Branconnier,
and on his behalf, Dr. Cumming, were "running the show". He noted the absence of any evidence from them in this
application. Particularly the absence of any evidence that the relied upon legal advice regarding their purported compliance
with the court's Order and Ruling. Counsel insisted that the bogus compliance with the July 10, 1998, Ruling can be laid
directly at their doorstep and, in the result, they should be found in contempt.
[21] While plaintiffs' counsel's submission with respect to the role of Mr. Branconnier and Dr. Cumming in the failure by the
Thermo Tech defendants to comply may be correct, in my view the evidence before the court does not allow me to make such
a finding of fact.
[22] Accordingly, the plaintiffs' application to find Mr. Branconnier and Dr. Cumming in contempt is dismissed. The plaintiffs' application for the imposition of punishment for the contempt by the Thermo Tech defendants is allowed. In this regard, the court imposes a further fine of $25,000 against each of the defendants, payable within seven days of the date of this Ruling.
Signed
Justice Cohen
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Have a nice Day!!
DD_Fact_Finder |
