Executive Summary: Key Legal and Evidentiary Issues

• The Federal Court considered a renewed motion for default judgment after an earlier motion was dismissed for evidentiary deficiencies.
   
• Proper service of the statement of claim on the corporate defendant became a central issue under the Federal Courts Rules.
   
• Ownership and subsistence of copyright in six educational works were not in dispute between the parties.
   
• Continued display and distribution of the works after the defendant stopped paying under the consulting agreement formed the basis of the infringement finding.
   
• Statutory damages under the Copyright Act were assessed by weighing bad faith, deterrence, and proportionality against the plaintiff's actual losses.
   
• An exclusion clause in the consulting agreement barred the plaintiff's claim for punitive damages.
   

Facts of the case

Dr. Reiza Rayman, a Clinical Associate in the Division of Cardiac Surgery at the London Health Sciences Centre with doctorate degrees in medicine and philosophy in robotic telesurgery, entered into a consulting agreement with Red Crayon Inc. (then named Scholars Learning Centre Inc.) on May 21, 2021. Under the agreement, Rayman took on the role of Director of Science, Technology, Engineering and Mathematics (STEM) for the defendant, a for-profit after-school tutoring franchise, in exchange for a fee of $50,000.00 per year. The agreement specified that Rayman was an independent contractor and that it did not transfer either party's intellectual property rights to the other.

Following execution of the agreement, Rayman developed six original works for use with LEGO education kits used by the defendant's franchisees: five Quick Reference Guides covering different LEGO kit lines, and a STEM Connect Program curriculum guide. These works were distributed to franchisees through the defendant's online platform, Scholars IQ. The defendant stopped paying Rayman's invoices in November 2023 and did not respond to his follow-up emails or a demand letter from his counsel, yet continued to make the works available through Scholars IQ. Rayman served the defendant with a statement of claim in October 2025 alleging copyright infringement, and the defendant did not file a defence.

Rayman's first motion for default judgment was dismissed by Justice Ngo on April 22, 2026, without prejudice to renewal on better evidence. The motion judge identified two gaps: insufficient evidence that service met the requirements of the Federal Courts Rules, and insufficient evidence explaining how the works were being accessed and infringed. This decision addresses Rayman's renewed motion, supported by additional affidavit evidence.

Policy and legislative provisions at issue

Central to the motion was Rule 130(1)(a)(ii) of the Federal Courts Rules, which governs service on a corporation by leaving documents with a person apparently in charge at the corporation's registered address. The motion judge had found that Rayman failed to explain how a front desk employee qualified as such a person; the renewed motion relied on a further affidavit of service clarifying that service was effected at the defendant's registered corporate address with the main receptionist, who agreed to accept the documents.

On the merits, the court applied subsection 34(1) of the Copyright Act, which entitles a copyright owner to remedies including injunction, damages, and delivery up where infringement is established, and subsection 27(1), which the defendant was found to have contravened. Damages were governed by paragraph 38.1(1)(a), setting statutory damages between $500.00 and $20,000.00 per work infringed for commercial purposes, with paragraphs 38.1(5)(a) to (c) directing the court to consider bad faith, the parties' conduct, and the need for deterrence. The consulting agreement itself was also relevant: it excluded either party's use of the works beyond the period for which fees were paid, and it barred claims for indirect, special, incidental, punitive, or consequential damages arising from any breach.

Reasoning and analysis

Justice Whyte Nowak began from the principle that a plaintiff moving for default judgment must not only show the defendant is in default but must prove the claim on the civil standard, with the court scrutinizing the evidence carefully. On service, the new affidavit evidence and a corporate profile report confirmed that service occurred at the defendant's registered address, resolving the deficiency the motion judge had identified, and the court found the defendant in default given its failure to respond within the time permitted under Rule 204.

On infringement, the court accepted that copyright subsisted in the six works and that Rayman owned that copyright, findings the motion judge had not questioned. The new evidence, including screenshots of the Scholars IQ platform and Rayman's own observations, clarified how franchisees and tutors accessed the works and confirmed they remained available on the platform after the defendant stopped paying. The court noted that the consulting agreement gave the defendant no licence to use the works independent of ongoing fee payment, so continued use after payments ceased in November 2023 constituted infringement.

On damages, the court weighed the defendant's continued use of the works and its listing of Rayman as Director of STEM on its website after being served, treating these as indicators of bad faith warranting deterrence. However, the court declined to award the requested maximum of $20,000.00 per work, noting that Rayman's actual damages of $75,000.06 reflected amounts owed for his broader consulting services, not solely the creation of the works, and that a $120,000.00 award would be disproportionate to the infringement itself. The claim for punitive damages was rejected outright based on the exclusion clause in the consulting agreement.

Ruling and overall outcome

The court found that Red Crayon Inc. was in default and had infringed Rayman's copyright in the six works, and granted Rayman default judgment. The court amended the style of cause to reflect the defendant's current corporate name, issued a declaration of copyright ownership and infringement, granted a permanent injunction, and ordered delivery up or destruction of infringing materials within ten days. Rayman, as the successful party, was awarded statutory damages of $13,000.00 per work for a total of $78,000.00, plus pre-judgment interest at 5% per annum calculated from the date of service (October 22, 2025) and post-judgment interest at 5% per annum on the damages and costs. Costs were fixed at a lump sum of $5,000.00, payable forthwith.