Contested Facts and Credibility Issues Preclude Summary Judgment
Canadian Private Copying Collective v. J & E Media Inc., et al., 2010 FC 102 (Mandamin, J.)

January 28, 2010

Randy Sutton and Dana Hirsh for the Plaintiff, Canadian Private Copying Collective (“CPCC”)
Jim Holloway and Rob Kittredge for the Defendants, J & E Media Inc., et al.

CPCC asked the Court to lift the corporate veil and find some or all of the Defendants personally liable for the unpaid levies of the corporate entities they control given their involvement in a conspiracy and actions to avoid levy payment obligations under the Copyright Act (the “Act”). Under the Act, authors and performers were exclusive holders of their creative works; however, the widespread use of copying media infringed their right. In 1998, the Act was amended to allow copying copyrighted music for private use in return for a levy on all blank media manufactured or imported in Canada.

J & E Media Inc. (U.S.A.), J & E Media Inc. (Canada), Media Distributors Canada Inc. ("MDCI"), Mr. Ayranian and Mr. Bilawejian (the “Moving Defendants”) applied for summary judgment seeking dismissal of the action commenced by CPCC.

The substantive issue before the Court was whether summary judgment should be awarded. Rule 213 of the Federal Court Rules permits the Court to grant summary judgment where there is no genuine issue for trial. One does not need to show that the plaintiff cannot possibly succeed; only that the case is clearly without foundation.

Justice Mandamin noted that the parties advanced conflicting evidence and pointed to different facts and inferences to be drawn from those facts to support their arguments. In particular, Justice Mandamin noted that the facts relating to a corporate changeover and the relationship between all the parties are disputed and cannot be resolved on summary judgment.

The Moving Defendants argued, in part, that the Court's authority to "lift the corporate veil" only allows the Court to impose liability on those who own and control a corporation found to have engaged in improper conduct. Justice Mandamin stated that it is justified when a corporation “is being used for fraudulent or improper purposes or as a “puppet” to the detriment of a third party.”  This was determined to be a triable issue.

Justice Mandamin stated that while the Court may entertain pure questions of law on summary judgment, in this case, he found that the question of whether or not CPCC may advance a claim of conspiracy among the defendants to avoid paying private copying levies as part of their case for proving a violation of the Act constitutes a serious question of law that cannot be dealt with on a summary basis.

Ultimately, Justice Mandamin dismissed the Moving Defendants’ motion for summary judgment due to the presence of serious questions of fact, issues of credibility, scrutiny of possible inferences and a serious question of law that must be answered by a trier of fact at trial.

By: Taryn Burnett, Gowling Lafleur Henderson LLP