Persistent procrastination proves pricey as the Federal Court strikes EverForce’s software piracy defence

Ansys sued Everforce Energy Ltd. and its president, Raad William Barnet, in April 2022 for unauthorized use of copyright-protected software. The defendants failed to comply with a January 2023 court order compelling them to produce an affidavit of documents and pay $1,000 in costs. This non-compliance would partly lead to the Federal Court’s decision to strike their statement of defence without leave to amend.

In January 2023, the defendants’ counsel indicated they no longer represented them, but the change was not formally recorded until July 2023. After changing counsel in July 2023, the defendants served an amended statement of defence, which the plaintiffs rejected.

In November 2023, the plaintiffs motioned to strike the defence as the defendant had not complied with the June order. At the March 2024 hearing of the motion to strike, the defendants sought an adjournment to change counsel again, further delaying proceedings. The court ordered supplemental motion materials, which the defendants again failed to file. The defendants still had not complied with the June order or paid the costs associated with that order.

The Court had to decide whether the defendant’s statement of defence should be struck due to their non-compliance, the appropriate cost award for the plaintiffs, and whether the defendant’s former counsel should be personally liable for costs due to misconduct.

The Court laid out the rules around motions to strike in paragraph 16:

[16] The Court has the power to strike a party’s pleading as a consequence for failing to comply with the obligation to disclose documents or for failing to comply with an order of the Court: Apotex Inc v Sanofi-Aventis, 2010 FC 77 at para 12; Louis Vuitton Malletier SA v Singga Enterprises (Canada) Inc, 2011 FC 247 at para 5. This Court has found that the remedy of striking a statement of defence is warranted where a defendant breached an order to produce an accurate affidavit of documents and showed disregard for the process of the Court: Canadian Private Copying Collective v Red Coast Imports Inc, 2009 FC 97 at paragraph 34 [Red Coast Imports].

The Court noted that the defendants had repeatedly failed to comply with the January 2023 order although there were multiple opportunities to rectify the situation. Despite Mr. Barnet stating that the defendants were in a position to provide affidavits of documents within 30 days, there was no evidence as to their progress in gathering documents or preparing the affidavit of documents.

The Court found that there was no evidence which provides a satisfactory explanation for not complying with the order. And that there was no reason to expect that they will comply with a further order. As such, the defence was struck.

The plaintiffs requested a $10,000 cost award, but the Court deemed the amount excessive. Instead, the court found $3,500 reasonable and appropriate. Consequently, the defendants’ statement of defence was struck without leave to amend. The defendants were held jointly and severally liable for a $3,500 cost award. A separate hearing was ordered to address costs related to the adjournment and the potential personal liability of the defendants’ former counsel concerning the adjournment costs.

The original decision can be read here.