500-09-020033-098 QUÉBEC COURT OF APPEAL (Montréal) On appeal from a judgment of the Superior Court, District of Montréal, rendered on August 26, 2009 by the Honourable Mr. Justice Claude Auclair. _______ No. 500-09-020033-098 C.A.M. – 500-05-021498-967 S.C.M. CINAR PRODUCTION LES FILMS CINAR INC. APPELLANTS (defendants) v. CLAUDE ROBINSON LES PRODUCTIONS NILEM INC. RESPONDENTS (plaintiffs) - and - FRANCE ANIMATION S.A. CHRISTOPHE IZARD RAVENSBURGER FILM + TV Gmbh RTV FAMILY ENTERTAINMENT AG RONALD A. WEINBERG CHRISTIAN DAVIN PETER HILLE BBC WORLDWIDE TELEVISION THERESA PLUMMER-ANDREWS HÉLÈNE CHAREST McRAW HOLDINGS INC. MIS-EN-CAUSE (defendants) RONALD WEINBERG ès qualités Liquidator of the Estate of Micheline Charest MIS-EN-CAUSE (defendant in continuance of suit) VIDEAL GESELLSCHAFT ZUR HERTELLUNG VON AUDIOVISUELLEN PRODUKTEN MHB 3918203 CANADA INC. MIS-EN-CAUSE (mis-en-cause) APPELLANTS’ FACTUM AND SCHEDULE Henri A. Lafortune Inc. 2005 Limoges Street Tel. 450 442-4080 Longueuil, Québec Fax 450 442-2040 J4G 1C4 [email protected] www.halafortune.ca - 2 - Me William Brock, Ad.E. Me Cara Cameron Me Christine Aubé-Gagnon Davies Ward Phillips & Vineberg LLP 26th Floor 1501 McGill College Avenue Montréal (Québec) H3A 3N9 Tel. : 514 841-6400 Fax : 514 841-6499 [email protected] [email protected] [email protected] Counsel for appellants Cinar Corporation, Les Films Cinar inc. and 3918203 Canada inc. Me Florence Lucas Me Francine Martel Me Jeanne Tugault-Lafleur Gowling Lafleur Henderson LLP 37th Floor 1 Place Ville-Marie Montréal (Québec) H3B 3P4 Tel. : 514 392-9590 Fax : 514 878-1450 [email protected] [email protected] [email protected] Counsel for respondents Claude Robinson and Les Productions Nilem inc. Me Pierre Y. Lefebvre Me Alain Y. Dussault Me Silviu Bursanescu Fasken Martineau DuMoulin LLP Suite 3700 800 Victoria Square Montréal (Québec) H4Z 1E9 Tel. : 514 397-7400 Fax : 514 397-7600 [email protected] [email protected] [email protected] Counsel for mis-en-cause France Animation S.A., Christophe Izard, Ravensburger Film + TV Gmbh et RTV Family Entertainment AG - 3 - Me Guy J. Pratte Me Daniel Urbas Me Marc-André Grou Borden Ladner Gervais LLP Suite 900 1000 de La Gauchetière Street West Montréal (Québec) H3B 5H4 Tel. : 514 879-1212 Fax : 514 954-1905 [email protected] [email protected] [email protected] Counsel for mis-en-cause Christian Davin Me Michel Bernier Gravel Bernier Vaillancourt Iberville Trois Block Suite 500 2960 Laurier Blvd. Québec (Québec) G1V 4S1 Tel. : 418 656-1313 Fax : 418 652-1844 [email protected] Counsel for mis-en-cause Hélène Charest Me Raynold Langlois Me Dimitri Maniatis Me Jean Patrick Dallaire Me Marie-Pier Lefebvre Langlois Kronström Desjardins LLP 28th Floor 1002 Sherbrooke Street West Montréal (Québec) H3A 3L6 Tel. : 514 842-9512 Fax : 514 845-6573 [email protected] [email protected] [email protected] [email protected] Counsel for mis-en-cause Ronald A. Weinberg and Ronald A. Weinberg, ès qualités Liquidator of the Estate of Micheline Charest TABLE OF CONTENTS i) Description of Documents Page APPELLANTS’ ARGUMENT PART I – FACTS .................................... 1 I. Preliminary comments .................................... 1 II. History of Cinar, Weinberg and Charest .................................... 3 III. Cinar's Contractual Relationship with Pathonic, and the Absence of a Contractual Relationship with Respondents .................................... 5 IV. Profits earned by Cinar from Sucroë .................................... 6 V. Cinar's involvement in the creation of Sucroë .................................... 8 PART II – ISSUES IN DISPUTE .................................. 10 PART III – ARGUMENT .................................. 11 A. The Trial Judge erred by condemning France Animation, Ravensburger, Cinar and the other Appellants to pay solidarily the aggregate profits made by all of them, as opposed to ordering each to disgorge its own profits .................................. 11 B. The Trial Judge erred by failing to allow the deduction of an expense, in an amount of $1,111,201 payable by Cinar to an entity known as Jaffa Road in respect of the distribution of Sucroë .................................. 13 C. The Trial Judge erred by ordering that interest be paid on disgorged profits from December 5, 1995, instead of from the date that such profits were earned .................................. 15 TABLE OF CONTENTS ii) Description of Documents Page D. The Trial Judge erred in his subsidiary conclusion, at paragraph 908 of the Trial Judgment, that Cinar was responsible under the rules of extra-contractual liability, even if there had been no infringement of copyright .................................. 16 E. The Trial Judge erred in condemning Cinar, solidarily with France Animation, Ravensburger and the other Appellants, to pay $1,000,000 in exemplary damages .................................. 20 PART IV – CONCLUSIONS .................................. 25 PART V – AUTHORITIES .................................. 26 SCHEDULE II – ADDITIONAL PROCEEDING Affidavit of Claude Robinson Feb. 13, 2001 27 Exhibit I-1 Articles de journaux du 20 décembre 2000 .................................. 30 Exhibit I-2 Action de Cinar contre les défendeurs requérants en date du 30 janvier 2001 .................................. 36 Exhibit I-3 Articles de journaux du 7 février 2001 .................................. 84 __________ Attorneys’ Certificate .................................. 95 _______________ 1 Appellants’ Argument Facts APPELLANTS’ ARGUMENT PART I – FACTS I. PRELIMINARY COMMENTS 1. In the 1980s, when the Respondent Claude Robinson ("Robinson") created Les Adventures de Robinson Curiosité (“Curiosité”), and in the 1990's when Christophe Izard ("Izard") created, and France Animation S.A. ("France Animation"), Ravensburger Film + TV GmbH ("Ravensburger") and the Appellant Cinar Corporation (formerly known as Les Films Cinar Inc.) ("Cinar") co-produced the Robinson Sucroë television series ("Sucroë"), Cinar was controlled by Co- Appellants, Ronald A. Weinberg (“Weinberg”) and his late wife Micheline Charest (“Charest”), who were its two most senior executives. 2. In March 2000, Weinberg and Charest resigned as senior executives of Cinar following the discovery of their misconduct relating to various aspects of Cinar's business and assets, which caused substantial harm to Cinar and its shareholders. In 2002, as a result of such conduct, they were sanctioned and personally fined $1 million each by the Quebec Securities Commission ("QSC"). They ceased to act (and were prohibited for a period of five years from acting) as Directors of Cinar or any other Canadian publicly traded company. They were prohibited from voting the shares they held in Cinar, also for a period of five years1. Further, again as a result of this wrongful conduct, Cinar instituted proceedings in 2001 against Weinberg and Charest seeking to hold them accountable for millions in damages suffered by Cinar as a result of their actions2. In 2004, Cinar was purchased by new arm’s length investors, who had no prior involvement with Cinar or in the facts at issue in this case. 1 Exhibit P-83, the press release issued by the QSC on March 15, 2002 (“QSC Press Release”), p. 11, A.C., Vol. 12, p. 4273, Tab 57. 2 Exhibit I-2 of the Affidavit of Claude Robinson dated February 13, 2001, infra, pp. 36 and ff.. 2 Appellants’ Argument Facts 3. In this factum, Cinar submits the following arguments: (a) If there was infringement, which is denied, the Trial Judge erred by condemning France Animation, Ravensburger and Cinar (collectively the “Co-Producers”) and the other Appellants to pay solidarily the aggregate profits, as opposed to ordering each Co-Producer to disgorge its own profits to Respondents; (b) The Trial Judge erred by refusing the deduction of an expense, in an amount of $1,111,201 payable by Cinar to an entity known as Jaffa Road. (c) The Trial Judge erred by ordering that interest be paid on disgorged profits from December 5, 1995, instead of from the date that such profits were earned. (d) The Trial Judge erred in his subsidiary conclusion, at paragraph 908 of the Trial Judgment, that Cinar was responsible under the rules of extra-contractual liability. (e) The Trial Judge erred in condemning Cinar, solidarily with the other Appellants to pay $1,000,000 in exemplary damages. 4. In addition to the foregoing, in the interest of the orderly management of the appeal process, Cinar adopts and relies on the description of the facts set out in the factum filed by France Animation, Izard and Ravensburger (collectively the "France Animation Appellants") as if recited in full herein adds at the facts that follow herein below. Cinar further relies on, as if recited in full herein, the submissions made by the France Animation Appellants, particularly with respect to the issues of infringement, damages and costs, and the submissions concerning punitive damages made by the Appellant Christian Davin (“Davin”). 3 Appellants’ Argument Facts II. HISTORY OF CINAR, WEINBERG AND CHAREST 5. Cinar, was founded by Weinberg and Charest in 1976. It was and remains involved in the development, production, post production and world-wide distribution of entertainment programming and educational products for children and families3, including as Co-producers of Sucroë. 6. Until March 2000, when trading in the shares of Cinar was halted by regulatory authorities, shares