Court and Parties

COURT OF APPEAL FOR ONTARIO DATE: 20221121 DOCKET: C70182

Paciocco, George and Favreau JJ.A.

BETWEEN

The Corporation of the Town of Caledon Plaintiff (Respondent)

and

Darzi Holdings Ltd., Rafat General Contractor Inc. and Layth Rafat Salim, a.k.a. Carlo Salim Defendants (Appellants)

Counsel: Kevin D. Sherkin and Kaleigh Sonshine, for the appellants Melissa Winch and Robert Sniderman, for the respondent The Corporation of the Town of Caledon Aaron Hershtal, for the respondent Bernie Romano

Heard: November 9, 2022

On appeal from the order of Justice Frederick L. Myers of the Superior Court of Justice, dated December 9, 2021.

Reasons for Decision

[1] The appellants, Darzi Holdings Ltd. (“Darzi”) and Rafat General Contractor Inc. (“Rafat”) are closely held corporations controlled by the appellant, Layth Rafat Salim (“Mr. Salim”). Rafat, a construction company, carried on business on properties owned by Darzi in the Town of Caledon (the “Town”). On February 8, 2021, the appellants were found to be in civil contempt of court for disobeying a court order relating to the conduct of Rafat’s business on Darzi’s properties. They were sentenced jointly and severally to pay a $1,000,000 fine. They appealed that sentence, but we dismissed their joint appeals after oral submissions. The material facts and our reasons for doing so are as follows.

[2] From as early as 2017, under Mr. Salim’s direction, Rafat was parking hundreds of vehicles outdoors on Darzi’s properties in violation of a city by-law, even after having been fined for doing so. Rafat also trespassed on adjacent Town property and illegally constructed a fence on the Town’s land.

[3] On September 12, 2019, the appellants were enjoined to: (1) stop trespassing on the Town’s land; (2) to remove the fence by January 11, 2020; and, (3) to refrain from using Darzi’s properties for outdoor vehicle storage (the “Order”). On February 8, 2021, after continued non-compliance with terms (2) and (3) of the Order, the appellants were found in civil contempt. That finding was not appealed. The fence was removed soon after, on March 25, 2021, while sentencing on the finding of civil contempt was pending.

[4] On December 9, 2021, the sentence for civil contempt of a $1,000,000 fine was imposed.

[5] In support of their appeal, the appellants sought leave for the admission of fresh evidence to show that they had made bona fide efforts to comply with the injunction, which they rely on as mitigating. They sought to overcome the due diligence requirement of the “Palmer test” (after R. v. Palmer, [1980] 1 S.C.R. 759) for the admission of fresh evidence by alleging the ineffective assistance of trial counsel, Mr. Bernie Romano, for having failed to present this evidence.

[6] It is not in the interests of justice to admit the fresh evidence. We therefore denied leave to the appellants to present this evidence.

[7] First, this is a sentencing appeal. The lawyer whose conduct the appellants sought to impugn was their trial counsel, and he ceased representing the appellants many months before the sentencing hearing where they were represented by other counsel who presented evidence during the sentencing hearing. With due diligence, any fresh evidence the appellants now seek to admit on appeal could have been presented at the sentencing hearing by their new counsel, who is not the subject of an ineffective assistance of counsel appeal.

[8] Second, some of the evidence offered as fresh evidence was in fact before the sentencing judge or was offered to prove facts that the sentencing judge accepted. It is evident that none of this proposed evidence was reasonably capable of having affected the outcome the sentencing judge imposed.

[9] Other evidence offered as fresh evidence was admitted at trial but not reintroduced during the sentencing hearing. The responsibility for this tactical decision cannot be laid at the feet of trial counsel.

[10] The balance of the evidence sought to be admitted was either irrelevant or not reasonably capable of affecting the result of the sentencing. For example, the fact that trial counsel did not bring an application to vary the injunction could not reasonably have affected the outcome, given that the grounds available to support a variation application did not forestall the sentencing judge’s conclusion at the time of sentencing that the breaches were flagrant, protracted, deliberate and profitable.

[11] The appellants contend that Mr. Salim’s trial counsel provided ineffective assistance by crafting inadvisable statements in his affidavit. However, this proposed evidence cannot alter the outcome. Although trial counsel may have drafted Mr. Salim’s affidavit, Mr. Salim swore its contents to be true and he offered no evidence that he did not understand what he was swearing to. Moreover, Mr. Salim reaffirmed the evidence he provided in his affidavit during oral cross‑examination.

[12] We therefore dismissed the application for leave to admit fresh evidence, without the need to assess whether trial counsel’s performance was indeed ineffective.

[13] Nor did we need to assess whether trial counsel’s performance was ineffective to dismiss the ineffective assistance of counsel ground of appeal, given the absence of prejudice just described. We therefore wish to emphasize that nothing we say in these reasons should be taken as suggesting that trial counsel’s representation of the appellants was ineffective.

[14] Nor were we persuaded that the sentencing judge failed to consider mitigating circumstances. He committed no palpable and overriding error in finding that the appellants had exaggerated their compliance efforts, and there is no basis for concluding that he failed to consider the efforts that the appellants claim to have undertaken.

[15] We were also unpersuaded that the sentencing judge committed a palpable and overriding error in finding that the post-injunction profit from the business was earned in defiance of the court order. Mr. Salim provided sworn testimony in his affidavit that the appellants could not have carried on the business if they complied with the injunction, and he reaffirmed this claim during his cross-examination on that affidavit. The trial judge was entitled to accept this evidence and conclude that, under those circumstances, the profit that was earned by the appellants was earned in defiance of the court order.

[16] We rejected the submission that the sentencing judge misapprehended Mr. Salim’s evidence in this regard. The claim made before us that Mr. Salim was merely being rhetorical when he said that compliance would “put [him] on the street” or that he was referring to having to park on the street is not sustainable when Mr. Salim’s testimony is read as a whole. The sentencing judge’s decision to take Mr. Salim’s evidence at face value was not a misapprehension.

[17] We also rejected the submission that the sentencing judge erred by equating the fine he selected with the profit earned. He did not do so. He found that the profit exceeded $1,000,000 by an undetermined amount. He instead used the profit earned as a “benchmark”, as he was entitled to do. We agree with the observation made by Akbarali J. in The Corporation of the Township of King v. 11547372 Canada Inc. et al, 2022 ONSC 2261, at para. 26 that “when determining a fit fine, the court should consider the economic circumstances of the contemnor, and the amount of fine that will have enough of an impact on the contemnor to induce future compliance with the court’s orders”. This, of course, includes consideration of whether the needs of sentencing can be met without requiring disgorgement through a fine of all or a significant part of the profit attributable to the breach.

[18] Finally, we rejected the submission that the fine imposed in this case was unfit. The sentencing judge reasonably found the appellants’ disobedience of the court order to be flagrant, protracted, deliberate and profitable. He clearly reasoned that the appellants would not be deterred from future breaches if permitted to profit from their conduct, given the history of this matter. Certainly, the fine imposed by the sentencing judge outstrips the civil contempt fines imposed in the vast majority of cases but it is neither unprincipled nor unprecedented. An identical fine was upheld by this court in College of Optometrists of Ontario v. SHS Optical Ltd., 2008 ONCA 685, 93 O.R. (3d) 139. To be sure, the facts of SHS Optical are not on all fours with the facts of this case, but the underlying principles and the seriousness of the contempt are comparable. We were unpersuaded, in the circumstances of this case, that the fine imposed was unfit.

[19] The appeal is dismissed.

[20] Costs, including the costs of the motion to set aside the dismissal order and the motion for fresh evidence, are payable by the appellants to the Town in the amount of $100,000, and to Bernie Romano in the amount of $21,668.18, inclusive of applicable taxes and disbursements.

“David M. Paciocco J.A.”

“J. George J.A.”

“L. Favreau J.A.”