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College of Optometrists of Ontario v. SHS Optical Ltd.

On January 13, 2009, the Ontario Court of Appeal unanimously dismissed the appeal brought by Bruce and Joanne Bergez, SHS Optical, and others, in which they sought to overturn a $16 million fine imposed for contempt. In doing so, the Court of Appeal upheld the highest fine for contempt in Canadian history.

At the time of the decision, the appellants had been running a highly profitable optical dispensary business under the name Great Glasses. In 2003 there were 3 stores and by 2006 there were 17. There are currently 23. An essential ingredient of Great Glasses’ success has been the use of a computer to measure the eye’s refractive error. It was used on customers who came into the stores without a prescription from an optometrist or physician to measure their refractive error. The customers’ eyeglasses or contact lenses would be prepared and dispensed solely on the basis of the computer data in place of a prescription from an optometrist or a physician.

The problem with this business model is that, in Ontario, opticians may only dispense corrective lenses if they have a prescription from a properly registered optometrist or physician. The computer is not an optometrist or a physician, nor does it check for diseases such as glaucoma, which optometrists and physicians do. The Bergezes’ use of this technology had previously been found by the courts to be illegal, dangerous to their customers’ health, and highly profitable.

Efforts to bring the appellants in compliance with health legislation first began in 2003. It was at that time that the College of Optometrists of Ontario (“COM”), brought an application for an order requiring the appellants to bring their business into compliance with Ontario’s health legislation. COM was successful, and Harris J. ordered that the appellants cease prescribing and dispensing eyewear without the prescription of an optometrist or physician.

Notwithstanding the Order of Harris J., the appellants continued operating in full defiance of his Order. In 2006, a contempt motion was brought before Crane J. who found the appellants to be in contempt of the Order of Harris J. He penalized their behaviour by imposing a $1 million fine and requiring the appellants, amongst other things, to post prominent signs relaying the limitations on their abilities to prescribe or dispense eyewear and to make similar statements in their advertising. He also held that there would be a $50,000 fine for each and every day the appellants failed to comply with his Order. The appeal from the Crane J.’s Order was dismissed by the Court of Appeal in October of 2008. Watt J.A. writing for the Court stated at that time, “We cannot suffer the sacrifice of the rule of law to the lure of lucre.”

The appellants continued to ignore the Orders of the Court. In October 2007, Fedak J. imposed the $50,000 per day fine contained in the Crane J. Order to run from the date of Crane J.’s Order to the date of his Order for a total of $16 million. It was from this Order and penalty that the appeal was brought to the Court of Appeal on January 6, 2009.

The Court asked the parties to address three issues, all of which were resolved in the respondent’s favour:

1. Were the appellants given a fair opportunity to address the allegations of non-compliance with the Crane Judgment and to advance any mitigating factors in respect of sentence in the proceedings before Fedak J.?;

2. Was the evidence relied on by Fedak J. in finding non-compliance with the Crane Judgment affected by the order and reasons of Perell J. arising out of an application brought by the College of Opticians against the operators of the Great Glasses franchised stores?; and

3. The fitness of the penalty.

The Court rejected the appellants’ contention that they had been denied fair opportunity to challenge the allegations or present evidence to mitigate their contempt based on three factors. First, the appellants had made a tactical decision not to produce any evidence to show they had either complied or attempted to comply with the Crane Judgment. Second, the appellants had not been precluded from requesting an adjournment to allow them to place material before the motions judge. Finally, counsel (on appeal) was unable to describe any affirmative evidence that she could have placed before Fedak J. to challenge the allegations of COM.

On the second question, the Court of Appeal rejected the argument advanced by the appellants that the conduct of the franchisees in the operation of their stores could not be used as a basis for a finding that the appellants were in breach of Crane J.’s order. The court found that Fedak J. had not imputed the conduct of franchisees to the appellants. Rather, he had used evidence relating to the operation of the franchised stores to draw the inference that Mr. Bergez was not complying with certain provisions of the Crane Judgment. This was an inference that was open to him on the evidence.

Perhaps most critical in this judgment was the Court’s decision to uphold the substantial fine imposed by Fedak J. The court agreed that there was a need for a very significant penalty noting that the appellants, having already been fined $1 million, had carried on their operations in defiance of Crane J.’s Order knowing that they faced a potentially huge penalty of $50,000 a day. Furthermore, considerable deference was owed to the quantum and Fedak J. had not erred in principle when he had decided to impose the maximum fine. As such, the fine of $16,000,000 stood.

Heather C. Devine of Gowling Lafleur Henderson LLP acted for the appellants, SHS Optical Inc. et al; Roy E. Stephenson and Brian P. Moher of Lerners LLP acted for the respondents, the College of Opticians of Ontario; and Robert W. Cosman and Melisse L. Willems of Fasken Martineau DuMoulin LLP acted for the intervenor, the College of Opticians of Ontario.