Court of Appeal for Ontario

Date: 2025-04-08
Docket: COA-25-CV-0030 & COA-25-CV-0100
Coram: Peter Lauwers, Ian V.B. Nordheimer, David A. Wilson

Parties

COA-25-CV-0030
Between:
Canadian Western Bank
Applicant (Respondent)

and

Canadian Motor Freight Ltd. and 2568403 Ontario Inc.
Respondents

COA-25-CV-0100
And Between:
Canadian Western Bank
Applicant (Respondent)

and

Canadian Motor Freight Ltd. and 2568403 Ontario Inc.
Respondents (Appellants)

Counsel

• Marryam Singh, for the appellants, United Group of Companies Ltd., Makhan Singh Bajwa, Davinder Singh Mangat and Tajeshwar Singh Dhaliwal (COA-25-CV-0030)
• Kristine Holder, for the appellants, Canadian Motor Freight Ltd., 2568403 Ontario Inc., Imran Hussain, Satbir Singh Kahlon and Sukhdeep Singh Arora (COA-25-CV-0100)
• Chenyang Li and Natasha MacParland, for the respondent, Ernst & Young Inc., in its capacity as court-appointed receiver (COA-25-CV-0030 & COA-25-CV-0100)
• Maya Poliak, for the respondent, Canadian Western Bank (COA-25-CV-0030 & COA-25-CV-0100)

Heard: 2025-04-01

On appeal from the orders of Justice William Black of the Superior Court of Justice, dated December 2, 2024, December 6, 2024, December 13, 2024, and January 13, 2025.

Reasons for Decision

Overview

[1] These two appeals arise out of a receivership order made under the Bankruptcy and Insolvency Act, RSC 1985, c B-3. In the course of that receivership, the motion judge found both sets of appellants to be in civil contempt of the receivership order and a related asset recovery order. One set of appellants consists of the debtor and its management, and the other set of appellants consists of the non-parties United Group of Companies and its management.

[2] At the conclusion of the hearing, we dismissed the appeal by the non-parties United Group of Companies and its management and reserved our decision on the appeal by the debtor and its management. We now provide our reasons on both appeals.

[3] We should note, at the outset, that the orders under appeal were clearly orders made under the BIA. As such, the appellants needed to obtain leave to appeal under s. 193(e). No motion was brought for leave to appeal. Rather, the parties, having been advised of this issue by the court in advance of the hearing, sought leave from this panel, despite the fact that s. 193(e) expressly provides that leave is to be obtained from a single judge. Notwithstanding these procedural errors, we chose to deal with the appeals in the interests of expediting the conduct of the receivership.

[4] The receivership order required the debtor to turn over its assets to the control of the receiver without any interference. Central to the issues in these appeals is a fleet of trucks belonging to the debtor.

[5] As found by the motion judge, instead of turning the fleet of trucks over to the Receiver, the debtor and its management moved the fleet of trucks to a yard owned by United Group. On learning of this, and after failed efforts to recover the trucks through discussions with United Group and its management, the Receiver obtained the asset recovery order that required United Group to provide the Receiver with access to its yard so that it could take possession and remove the trucks. As also found by the motion judge, United Group and its management failed to allow the Receiver to do so.

[6] The motion judge held a hearing and found the debtor, debtor management, United Group, and United Group management, in civil contempt of the receivership order and the asset recovery order. After a separate hearing, the motion judge sentenced the individual, who is the directing mind of United Group, to four days in prison. He ordered certain other of the individuals involved to pay various amounts of costs and he ordered the United Group to pay a much larger amount of costs.

The United Group Appeal

[7] United Group and its management appeal based on their assertion that the motion judge failed to provide sufficient reasons for his finding that they were in contempt and also failed to take into account the negotiations that the United Group and its management engaged in with the Receiver regarding the asset recovery order.

[8] There is no basis for the assertion that the motion judge failed to give adequate reasons. To the contrary, his reasons are detailed, and they are clear. Further, the motion judge found that the negotiations, to which United Group and its management refer, were engaged in to stall the Receiver. He found that United Group and its management clearly failed to provide the Receiver with access to the yard so that the Receiver could recover the trucks, as the asset recovery order expressly mandated. United Group and its management have failed to demonstrate any palpable and overriding error in the motion judge’s finding in this regard.

[9] We would also note, with respect to this appeal, that the appellants did not put any evidence before the motion judge that contradicted the Receiver’s evidence that they came to United Group’s yard, where the trucks were located, for the express purpose of removing the trucks but that United Group’s management refused to allow the Receiver to do so. Indeed, their position before this court is entirely inconsistent with their position at the sentencing hearing before the motion judge where they acknowledged their inappropriate conduct and apologized for it.

[10] Also, on the issue of evidence, the appellants brought a motion to introduce fresh evidence on the appeal. We do not accept the fresh evidence. It does not satisfy the test for fresh evidence set out in R. v. Palmer, [1980] 1 S.C.R. 759. In particular, it is evidence that could have, and should have, been placed before the motion judge. It is also not evidence that could be expected to have affected the result.

[11] Finally, the appellants seek to appeal the sentence of imprisonment imposed by the motion judge and to appeal the costs awards that the motion judge made. On the latter point, the appellants require leave to appeal a costs award, which again, they have not sought. Had they sought leave, it would have been denied.

[12] In any event, the issue of the appropriate sentence for a civil contempt is a matter that is entirely within the discretion of the judge making the contempt finding. The appellants have not demonstrated any error in principle in the sentences imposed by the motion judge nor are the sentences manifestly unfit. Indeed, given the background facts, we would consider the sentences to be on the lenient side.

Debtor Management Appeal

[13] The debtor and debtor management appeal based on their assertion that the movement of the trucks to the United Group yard was, essentially, undertaken in the normal course of business as there was no room at the debtor’s premises to house the number of trucks involved.

[14] The appellants point to an affidavit filed by the former manager of the debtor in which he says that another employee had a conversation with a representative of the Receiver and that the representative “directed” the employee to park all of the trucks at the yard owned by United Group. We first note that this part of the affidavit is hearsay. It is only arguably made evidence by the fact that the employee involved filed an affidavit in which he made a blanket statement that he agreed with everything that was in the former manager’s affidavit.

[15] Regardless of that issue, that part of the affidavit is contradicted by the evidence of the Receiver who says that it first found out that the trucks were at the United Group’s yard when it went to the debtor’s premises to collect the trucks and was advised, for the first time, that the trucks were in the United Group’s yard because of space issues. This evidence is also contradicted by the December 13, 2024, endorsement of the motion judge which expressly refers to the fact that he had delayed the implementation of the receivership order “specifically for the purpose of giving the Debtor Management time to return the Fleet Assets back to 400 Brunell [the debtor’s premises] to allow the Receiver to take possession of them.” No mention is made of delivering the trucks to the United Group’s yard.

[16] It was up to the motion judge to resolve any conflict in the evidence on this point and he did so. The motion judge found that the trucks had been moved to the United Group’s yard from the debtor’s premises after the receivership order was made and that this was done in contravention of the receivership order. That was a factual finding that was available to the motion judge on the record that was before him. The debtor and debtor management have failed to show any palpable and overriding error in the motion judge’s conclusion in this regard.

[17] The appellants also submit that the contempt finding does not satisfy the three elements required for such a finding, namely:

i. the order alleged to have been breached must state clearly and unequivocally what should and should not be done;
ii. the party alleged to have breached the order must have had actual knowledge of it; and
iii. the party allegedly in breach must have intentionally done the act that the order prohibits or intentionally failed to do the act that the order compels. [1]

[18] The receivership order is clear. In paragraph 4 it states that the debtor, among others, “… shall forthwith advise the Receiver of the existence of any Property in such Person's possession or control, shall grant immediate and continued access to the Property to the Receiver, and shall deliver all such Property to the Receiver upon the Receiver's request.”

[19] The debtor and its management were aware of the receivership order. They were provided with a copy of it.

[20] The debtor and its management did not comply with the order. By delivering the trucks to United Group’s yard, they did not deliver the property to the Receiver, as they had clearly been asked to do. The whole reason for the delay in implementing the receivership order was to permit that very event to happen. The appellants’ submission that, in acting as they did, they did not intend to breach the receivership order does not excuse their breach of it. As Cromwell J. said in Carey v. Laiken, 2015 SCC 17, [2015] 2 S.C.R. 79, paras. 33–35, 38: “It is well settled in Canadian common law that all that is required to establish civil contempt is proof beyond a reasonable doubt of an intentional act or omission that is in fact in breach of a clear order of which the alleged contemnor has notice” (citations omitted).

[21] As subsequent events amply demonstrate, the fact that the debtor and its management directed the trucks to the United Group’s yard placed those assets out of their control and out of reach of the Receiver for some considerable period of time.

Conclusion

[22] It is a fundamental principle that orders of a court are to be obeyed. They are not to be stalled, and they are not to be negotiated. Serious consequences are to be expected by anyone who wilfully fails to obey a court order.

[23] The appeals from the contempt findings are dismissed as are the appeals from the sentences imposed. The stay of the sentences ordered by Miller J.A. on January 23, 2025, is vacated. The Receiver is entitled to its costs of the debtor/debtor management appeals fixed in the agreed amount of $12,000. The Receiver is also entitled to its costs of the United Group appeals which we would fix at $25,000. Both amounts are inclusive of disbursements and HST.

“P. Lauwers J.A.”
“I.V.B. Nordheimer J.A.”
“D.A. Wilson J.A.”

[1] Carey v. Laiken, 2015 SCC 17, [2015] 2 S.C.R. 79, at paras. 33–35.