SNC-Lavalin Profac Inc. v. Sankar

[Indexed as: SNC-Lavalin Profac Inc. v. Sankar]

94 O.R. (3d) 236

Court of Appeal for Ontario,

Laskin, MacPherson and R.P. Armstrong JJ.A.

January 30, 2009

Contempt of court -- Disobedience of court order -- Sentence -- Motion judge erring in ordering that fine imposed on defendants for contempt of court in civil action be paid to plaintiff -- Contempt of court for breach of court order constituting offence against authority of court and administration of justice -- Fine payable to Crown -- Amount of fine reduced from $150,000 to $10,000.

The motion judge found the defendants to be in contempt of court for disobeying a Mareva injunction in a civil action. She fined them $150,000, payable to the plaintiff. The defendants appealed.

Held, the appeal should be allowed in part.

The motion judge erred in ordering that the defendants pay the fine to the plaintiffs. Contempt of court for breach of a court order is an offence against the authority of the court and the administration of justice. A fine for contempt of court should go to the Crown and not to the plaintiff in the lawsuit.

The motion judge did not identify any public interest in imposing a large fine. Justice would be served by reducing the fine from $150,000 to $10,000.

The motion judge did not err in awarding the costs of the motion to the plaintiff on a substantial indemnity basis because of what she characterized as flagrant and intentional breaches of the Mareva injunction.

APPEAL from the order of Chapnik J., [2008] O.J. No. 2048, 166 A.C.W.S. (3d) 371 (S.C.J.) for finding of contempt of court and from a fine. [page237]

Cases referred to Chiang (Trustee of) v. Chiang, [2009] O.J. No. 41, 2009 ONCA 3; Pro Swing Inc. v. Elta Golf Inc., [2006] 2 S.C.R. 612, [2006] S.C.J. No. 52, 2006 SCC 52, 273 D.L.R. (4th) 663, 354 N.R. 201, J.E. 2006-2235, 218 O.A.C. 339, 41 C.P.C. (6th) 1, 52 C.P.R. (4th) 321, 152 A.C.W.S. (3d) 70, EYB 2006-111169; R. v. B.E.S.T. Plating Shoppe Ltd. (1987), 1987 4056 (ON CA), 59 O.R. (2d) 145, [1987] O.J. No. 165, 21 O.A.C. 62, 32 C.C.C. (3d) 417, 1 C.E.L.R. (N.S.) 145, 19 C.P.C. (2d) 174, 1 W.C.B. (2d) 323 (C.A.); R. v. Jetco Manufacturing Ltd. (1987), 1987 4436 (ON CA), 57 O.R. (2d) 776, [1987] O.J. No. 25, 18 O.A.C. 313, 31 C.C.C. (3d) 171, 1 C.E.L.R. (N.S.) 243, 1 W.C.B. (2d) 117 (C.A.); Royal Bank of Canada v. Yates Holding Inc., [2007] O.J. No. 1264, 156 A.C.W.S. (3d) 595, 73 W.C.B. (2d) 329, 2007 23601 (S.C.J.); Sussex Group Ltd. v. 3933938 Canada Inc. (c.o.b. Global Export Consulting), [2003] O.J. No. 2952, [2003] O.T.C. 683, 124 A.C.W.S. (3d) 482, 2003 49334 (S.C.J.)

Statutes referred to Courts of Justice Act, R.S.O. 1990, c. C.43, s. 143(2) Criminal Code, R.S.C. 1985, c. C-46, ss. 734.1, 734.4(1)

Rules and regulations referred to Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rule 60.11(5) (c)

John W. Bruggeman, for appellants Derek Sankar and D.M.S. Contracting Services. William D. Dunlop and Richard Campbell, for appellants Audrey Holder-Sankar, Massdan Group Inc., Jubilee Cleaners and Harbard Coin Laundry & Dry Cleaning. Kathryn J. Manning and Erin Hoult, for respondent.

The judgment of the court was delivered by

[1] LASKIN J.A.: -- The main issue on this appeal is whether the trial judge erred in ordering that a fine for contempt of a court order be paid to the plaintiff, SNC-Lavalin Profac Inc., instead of to the Provincial Treasurer.

A. Overview

[2] The appellants, Derek Sankar and Audrey Holder-Sankar, who are husband and wife, were employed by Profac, a property management company. Their employment ended in 2004. Profac has alleged that the Sankars together with their wholly owned businesses, D.M.S. Contracting, Massdan Group Inc., Jubilee Cleaners and Harbard Coin Laundry & Dry Cleaning, defrauded Profac by billing it for inflated or fictitious invoices. Profac has sued the appellants for $6 million.

[3] In June 2005, Profac obtained an Anton Pillar order and a Mareva injunction. Those orders have been continued until trial. The Mareva injunction order is broad. It prohibits the Sankars from: -- withdrawing more than $3,500 per month from their bank accounts for living expenses; -- encumbering or dissipating their assets; and -- using their credit cards.

[4] In April 2008, Profac brought a contempt motion for repeated breaches of the Mareva injunction. Profac alleged that the Sankars' contempt consisted of using their credit cards, spending more that $3,500 per month and transferring approximately $400,000 into a different account the day after the initial Mareva injunction order had been served on them. The Sankars did not seriously dispute these allegations.

[5] Chapnik J. heard the motion and found the appellants in contempt of court. She imposed a fine of $150,000 on the appellants jointly, to be paid to Profac within 30 days. In default of payment, the appellants' pleadings were to be struck. She awarded [page238] Profac its costs of the motion on a substantial indemnity scale, fixed at $57,000.

[6] The appellants raised four grounds of appeal: (1) the motion judge erred in making a finding of contempt; (2) the motion judge erred in refusing to permit Audrey Holder- Sankar to give oral evidence at the hearing of the contempt motion; (3) the motion erred by imposing a fine in an excessive amount, by ordering that it be payable jointly and by ordering that it be paid to Profac; and (4) the motion judge's costs award is excessive We called on Profac only on the issues relating to the fine and costs.

B. Discussion

1. The finding of contempt

[7] We did not need to hear from Profac on the finding of contempt because that finding was amply supported by the record. Indeed, the evidence that the appellants intentionally did the acts prohibited by the Mareva injunction order was largely uncontested.

2. The refusal to permit Audrey Holden-Sankar to give oral evidence

[8] The motion judge did not err in ruling that Mrs. Sankar would not be permitted to testify at the contempt hearing. Profac did not seek her imprisonment as a sanction for her contempt; no material facts were in dispute; and she chose not to file an affidavit in response to the motion: see R. v. B.E.S.T. Plating Shoppe Ltd. (1987), 1987 4056 (ON CA), 59 O.R. (2d) 145, [1987] O.J. No. 165 (C.A.); R. v. Jetco Manufacturing Ltd. (1987), 1987 4436 (ON CA), 57 O.R. (2d) 776, [1987] O.J. No. 25 (C.A.).

3. The fine of $150,000

[9] Profac did not ask that the appellants be imprisoned for their contempt of court. Instead, it sought a fine to be paid to the credit of the action. The motion judge imposed a fine of $150,000 and went beyond what Profac had asked for by ordering that the fine be paid to Profac.

[10] Under Ontario's Rules of Civil Procedure, R.R.O. 1990, Reg. 194, a fine is an enumerated sanction that the court may [page239] impose for contempt based on the breach of a court order (other than an order for the payment of money): see rule 60.11(5)(c). The appellants, however, make three attacks on the fine imposed on them: that it is payable jointly; that it is to be paid to Profac; and that the amount is excessive and beyond their means.

(a) Payable jointly

[11] Mr. Sankar argues that the motion judge erred in making the fine payable jointly as he and his business D.M.S. have no means to pay it. I disagree with this argument.

[12] Mr. and Mrs. Sankar are husband and wife and live together. Theirs was a joint enterprise. They acted in tandem throughout, together breaching the same prohibitions in the Mareva injunction order. And the evidence on the motion showed there was money available to both of them to pay the fine.

(b) To be paid to Profac

[13] As I have said at the outset, this is the main issue on the appeal. The motion judge ordered that the appellants pay the $150,000 fine to Profac. The appellants submit that she erred in doing so, and that if any fine is imposed, it should be payable to the Provincial Treasurer. I agree with that submission.

[14] Contempt of court for breach of a court order is an offence against the authority of the court and the administration of justice. As Cumming J. said in Sussex Group Ltd. v. 3933938 Canada Inc. (c.o.b. Global Export Consulting), [2003] O.J. No. 2952, 2003 49334 (S.C.J.), at para. 13, "It does not have, and must not appear to have, the function of a civil action in tort or for breach of contract." See, also, Royal Bank of Canada v. Yates Holding Inc., [2007] O.J. No. 1264, 2007 23601 (S.C.J.), per Cumming J., at para. 19. A fine for contempt of court, therefore, should not go to the plaintiff in the lawsuit.

[15] Provisions of the Criminal Code, R.S.C. 1985, c. C-46 and the Courts of Justice Act, R.S.O. 1990, c. C.43 support this conclusion. The Criminal Code is relevant because, although the appellants committed a civil contempt of court, civil contempt bears the imprint of the criminal law. A person found in civil contempt may face any sanction available for the commission of a criminal offence. A fine is one of those sanctions: see s. 734.1 of the Criminal Code; Pro Swing Inc. v. Elta Golf Inc., 2006 SCC 52, [2006] 2 S.C.R. 612, [2006] S.C.J. No. 52; and Chiang (Trustee of) v. Chiang, [2009] O.J. No. 41, 2009 ONCA 3.

[16] Consistency dictates that the recipient of a fine for civil contempt should be the same as the recipient of a fine for the [page240] commission of a criminal offence. Under s. 734.4(1) the proceeds of a fine imposed on the commission of a criminal offence belong to Her Majesty in Right of Ontario and should be paid to the Provincial Treasurer. Equally, the fine imposed by the motion judge should be paid to the Provincial Treasurer, and not to Profac.

[17] Section 143(2) of the Courts of Justice Act also shows that a fine for contempt should go not to the plaintiff but to the Crown. Under that provision, it is the Attorney General, rather than a party to the litigation, who may enforce a fine for contempt of court. I therefore conclude that, although the motion judge was entitled to fine the appellants, she erred in ordering that the fine be paid to Profac.

(c) Amount

[18] The appellants, of course, seek to minimize the amount of the fine. But so too does Profac, once it accepts that it will not receive the proceeds of the fine. Profac wants as much money as possible available to satisfy any judgment it obtains. The motion judge did not identify any public interest in imposing a large fine. I think justice would be served by reducing the fine from $150,000 to $10,000.

4. The costs award

[19] I would not disturb the motion judge's costs award. The motion judge awarded substantial indemnity costs because of what she characterized as flagrant and intentional breaches of the court orders. Her characterization is apt and justified a substantial indemnity award. The amount itself, $57,000, is admittedly high, but not so high that it warrants this court's intervention. And, the limited success that the appellants achieved on this appeal does not alter Profac's entitlement to the costs of the motion.

C. Conclusion

[20] I would reduce the fine from $150,000 to $10,000 and order that it be paid to the Provincial Treasurer instead of to Profac. In all other respects, I would dismiss the appeal. Because success was divided, I would order that there be no costs of the appeal.

Appeal allowed in part.