1586091 Ontario Ltd. v. Waffle, 2018 ONSC 3943

CITATION: 1586091 Ontario Ltd. v. Waffle, 2018 ONSC 3943 DIVISIONAL COURT FILE NO.: 282/17 DATE: 2018-06-27

SUPERIOR COURT OF JUSTICE – ONTARIO DIVISIONAL COURT

RE: 1586091 ONTARIO LIMITED carrying on business as RHED, Plaintiff (Appellant) AND Robyn Waffle, Defendant (Respondent)

BEFORE: Swinton J.

COUNSEL: M. Milosevic, for the Plaintiff (Appellant) Robyn Waffle, self-represented Respondent

HEARD at Toronto: June 22, 2018

ENDORSEMENT

Overview

[1] The appellant, 1586091 Ontario Ltd. (carrying on business as RHED), appeals the judgment of Deputy Judge Stewart Ferreira dated May 30, 2017 in which she dismissed its action for damages for infringement of copyright against the respondent Robyn Waffle and subsequently awarded costs that totaled $4,250.

[2] The appellant claimed to be the owner of a logo that was used by The Templar Hotel Corporation (“TTHC”), which developed and operated the Templar Hotel in Toronto. The respondent was an employee of that hotel for a number of years. In November 2014, the mortgagee, CVC Adellini Investment Inc., took possession of the hotel building, and continued to operate the hotel business under the same name – that is, the Templar Hotel. TTHC is now bankrupt.

[3] The respondent was employed by the new operation. The trial judge found that her employment with Adellini began in November 2014, although it is evident from the transcript that there was a great deal of uncertainty among employees as to their status in the period immediately after the mortgagee went into possession.

[4] The appellant brought this action against the respondent alleging that she infringed its copyright because of her use of the logo in the redesign of the hotel’s website and in obtaining a new sign for the exterior of the hotel in the period between January 2015 and January 2016.

The decision of the trial judge

[5] The trial judge assumed, without deciding, that the Copyright Act, R.S.C. 1985, c. C.-42 (the “Act”) applied. However, she concluded that the ownership in the logo had been transferred to TTHC prior to the alleged infringement. In the alternative, she concluded that the respondent was not liable to the appellant, as her actions with respect to the use of the logo all occurred during the course of her employment for Adellini.

The Issues

[6] The appellant argues that the trial judge made a palpable and overriding error of fact with respect to her finding of ownership, and that she erred in law in placing significance on the employment relationship of the respondent with Ardellini in the critical time period. The appellant also seeks to appeal the costs order.

The ownership issue

[7] The appellant, a corporation owned solely by Del Terrelonge, had entered into a contract for services dated March 9, 2009 with TTHC. Mr. Terrlonge was also a director and shareholder of TTHC, but there were other directors and shareholders as well. TTHC was created to develop and operate the Templar Hotel in Toronto. The contract stated that “[u]ntil all accounts are paid, RHED will remain as the author and owner of the intellectual property it creates on behalf of the Templar Hotel…” The logo had actually been designed around 2000 for a hotel to be developed.

[8] The trial judge concluded, on a balance of probabilities, that the ownership of the logo had been transferred to TTHC sometime before TTHC ceased to operate the hotel in November 2014. In doing so, she made an error of fact when she stated the “the plaintiff did not submit evidence that all accounts were not paid by TTHC to RHED.” In fact, Mr. Terrelonge made the bald statement in cross-examination that RHED was not paid. However, he did not provide any documentary evidence with respect to this issue. It may be the lack of any supporting documentary evidence, such as an invoice, to which the trial judge refers in her statement above.

[9] While the trial judge erred in that statement, I do not find that is an overriding error that renders her finding on the ownership issue unsafe. When her reasons are read as a whole, it appears that she found Mr. Terrelonge an unsatisfactory witness. She should have expressly discussed his credibility, and she did not do so. However, she observed that in his evidence, he described the contractual arrangement as if he had an ongoing right to the logo, without mentioning the qualifying phrase “until all accounts are paid.” She noted that his evidence and the terms of the contract did not match. I take from this that she had concerns about his lack of forthrightness.

[10] Mr. Terrelonge insisted that RHED and TTHC were separate entities. The trial judge did not accept that there had been no payment of the account in the years of operation from March 2009 to November 2014. She concluded that ownership had been transferred in accordance with the contract, given that TTHC used the logo throughout the years it operated the hotel. The onus was on RHED to prove ownership on a balance of probabilities, and the trial judge did not accept Mr. Terrelonge’s version of events.

[11] That was a reasonable conclusion. Mr. Terrelonge was not forthright, in chief, about the contractual arrangement. When his evidence is read as a whole, he appears evasive in answering questions, and the trial judge could reasonably reject his evidence that RHED had not been paid, given the ongoing working relationship between RHED and TTHC and TTHC’s use of the logo. I would not interfere with her finding respecting ownership.

The employment issue

[12] The appellant had pleaded that the respondent reproduced the logo with full knowledge of the appellant’s rights and for her own financial benefit.

[13] The trial judge found, in the alternative, that if the appellant owned the logo, the respondent was not liable for infringement of copyright. She found that the respondent was working for Ardellini at the time of the alleged copyright infringements, and that the respondent was acting under the direction of her new employer when she used the logo, whether for the design of the website or the new sign for the hotel exterior that replaced an existing sign with the logo.

[14] While again, the reasons could have been clearer, I see no basis to interfere with the finding that there is no liability on the part of the respondent. From the record, it is evident that the Templar Hotel continued to operate under the Ardellini management. The hotel continued to use the logo in its business, including on its website and new sign, and there was no effort by the appellant to stop the use of that logo in the hotel’s day to day operations.

[15] There was an email from Mr. Terrelonge in February, 2015 to Mr. Angellini and copied to the respondent that asserted rights to the logo for purposes of the redesign of the hotel website. However, there was no follow up correspondence demanding that the hotel cease and desist in the use of the logo in its operations – for example, when the new sign was erected.

[16] In the circumstances, if there was a real complaint about the use of the logo in the website or sign, it is telling that no action was taken against the hotel operator. Indeed, the failure to take some action against Ardellini suggests that the appellant was in agreement with the ongoing use of the logo by the hotel. In the circumstances, the trial judge reasonably concluded that the respondent did not herself infringe the copyright when she used it in the course of her employment for the hotel, as she had done earlier when she was employed by TTHC.

[17] The appellant suggested that the trial judge erred in failing to consider s. 38.1(1) of the Act, which deals with the measure of statutory damages. I see no error, as this provision does not come into play until there is an infringement of the copyright. The trial judge found no infringement by the respondent, and I see no basis for appellate intervention in respect of this finding.

[18] For these reasons, I would dismiss the appeal on the merits.

Costs of the proceeding

[19] That brings me to the issue of costs. The trial judge awarded $3,750 plus court costs plus $500 for the respondent as a self-represented litigant. No reasons were given. The appellant seeks leave to appeal that order, arguing that it is excessive and that the trial judge was biased.

[20] In my view, leave to appeal the costs order should be granted, as the award is clearly excessive. The award of $3,750 was, I assume, made in accordance with s. 29 of the Courts of Justice Act, R.S.O. 1990, c. C.43, which allows a Small Claims Court judge to award costs, other than disbursements, in an amount that does not exceed 15% of the amount claimed or the value of the property, unless it is necessary to penalize unreasonable behaviour in the proceeding.

[21] That provision should be read with the rules. Rule 19.04 allows a reasonable representation fee if the successful party was represented by a lawyer, student-at-law or paralegal. Rule 19.05 allows the award of a representation fee to a self-represented party for compensation for inconvenience and expense in an amount not to exceed $500. The respondent was self-represented at trial.

[22] The appellant argues that the trial judge was biased because of the costs award and her findings of fact. I reject this submission. I see no evidentiary basis to find bias or reasonable apprehension of bias.

[23] However, I am of the opinion that the trial judge erred in principle in awarding $3,750 in addition to the $500 fee to a self-represented litigant. I assume that she took the amount in issue to be $25,000 and awarded 15% thereof. Opening arguments suggested the damages could be up to $20,000. However, the trial judge failed to consider other important factors such as the real amount in issue in the case, the fact that the respondent was not represented by a lawyer and the principle of indemnity.

[24] Unfortunately, the trial judge did not have the respondent’s costs submissions before her, as they were lost by the Small Claims Court office. In those submissions, now found in the respondent’s compendium, the respondent sought $2,500 for legal fees. No details were given.

[25] It is evident from the respondent’s materials that she has had some legal advice. It is reasonable to award some amount to her for this. However, the award of $3,750 plus the $500 fee cannot stand.

[26] I would set aside the costs award and substitute an amount of $1,500 for fees (which includes the $500 to the respondent as a self-represented litigant and a reasonable amount for legal fees prior to the trial) plus disbursements of $50.

Conclusion

[27] In summary, the appeal is allowed in part. The trial judge’s award of costs is set aside, and an order is to go substituting an amount of $1,550 to the respondent for costs of the trial.

[28] That brings me to the costs of the appeal. The respondent has been largely successful on this appeal. She is self-employed and is entitled to some costs for the time she has expended in preparing materials and attending at this hearing. She seeks $1,500, and she has indicated that offers were made that might affect the costs order.

[29] The respondent will have 14 days to make brief written submissions on costs, with the appellant to make its brief written response within 10 days of receiving the appellant’s submissions. These submissions should be made through the Divisional Court office.

Swinton J.

Date: June 27, 2018