2024 ONSC 3896

COURT FILE NO.: CV-21-00663825-00CL DATE: 20240710 SUPERIOR COURT OF JUSTICE – ONTARIO (COMMERCIAL LIST)

RE: TRIDELTA INVESTMENT COUNSEL INC., TRIDELTA FIXED INCOME FUND, TRIDELTA HIGH INCOME BALANCED FUND, 2830063 ONTARIO INC., 2830064 ONTARIO INC., 2830068 ONTARIO INC., GTA MIXED-USE DEVELOPMENTS L.P., MIXED-USE DEVELOPMENTS (ONTARIO) L.P. and WASAGA DEVELOPMENTS AND INFRASTRUCTURE 2021 L.P. Plaintiffs (Moving Parties on Contempt Motion/Responding Parties on Stay Motion)

AND:

GTA MIXED-USE DEVELOPMENTS GP INC., MIXED-USE DEVELOPMENTS (ONTARIO) GP INC., WASAGA DEVELOPMENTS AND INFRASTRUCTURE GP INC. and U DEVELOPMENTS INC. Defendants/Plaintiffs by Counterclaim (Responding Parties on Contempt Motion/Moving Parties on Stay Motion)

AND:

TRIDELTA INVESTMENT COUNSEL INC., TRIDELTA FIXED INCOME FUND, TRIDELTA HIGH INCOME BALANCE FUND, 2830063 ONTARIO INC., 2830064 ONTARIO INC. and 2830068 ONTARIO INC. Defendants by Counterclaim

BEFORE: KIMMEL J.

COUNSEL: Christopher Naudie, Lauren Tomasich, Jayne Cooke & Graham Buitenhuis, for the Plaintiffs Annamaria Enenajor, Heather Gunter, Simon Bieber & Cameron Rempel, for the Defendants

HEARD: May 30, 2024

Endorsement – contempt motion and charter stay motion

Overview

[1] The eight-day trial of this matter concluded on July 13, 2023. The trial decision was released on September 18, 2023 (see Tridelta Investment Counsel Inc. v. GTA Mixed-Use Developments GP Inc., 2023 ONSC 5099, the “Trial Decision”). Capitalized terms not otherwise defined in this endorsement are defined in the Trial Decision.

[2] Since the Trial Decision was rendered, the parties have been back to court eight times (every month from October, 2023 to May, 2024 [^1]) prior to the May 30, 2024 hearing of the following two motions:

a. The plaintiffs’ motion for an order holding the defendants to be in contempt of the Trial Decision (the “Contempt Motion”).

b. The defendants’ motion to stay the contempt motion due to breaches of the Canadian Charter of Rights and Freedoms, Part 1 of the Constitution Act, 1982, being Schedule B to the Canada Act 1982 (UK), c 11 (“Charter”) alleged to have been committed in the course of the plaintiffs’ prosecution of the Contempt Motion (the “Stay Motion”).

[3] The Contempt Motion was originally returnable on January 5, 2024. It was adjourned twice after that until it was heard on May 30, 2024. The defendants’ concerns about disclosure-related Charter breaches that precipitated their Stay Motion were first raised on January 25, 2024. Additional Charter case splitting concerns were raised on April 5, 2024, after which the Stay Motion was adjourned and expanded.

[4] The issues raised by these two motions are interrelated:

a. The defendants were found by the court to be in breach of their obligations under the Trial Decision on January 5, 2024. The plaintiffs seek a finding of contempt and sanctions for the breaches identified on January 5, 2024 and point to other alleged breaches of the Trial Decision and conduct of the defendants that they say compounded the prior breaches and demonstrate a course of contemptuous conduct that is worthy of the court’s sanction.

b. The defendants say that they remedied the original breaches of the Trial Decision by January 22, 2024 and argue that the court ought not to make a finding of contempt or impose any sanction on them for those breaches. The other alleged breaches are supported by documentary disclosures that the defendants say were made too late and offended the plaintiffs’ Stinchcombe disclosure obligations and rules against case splitting that are intended to protect the defendants’ Charter rights to a fair trial and to make a full answer and defence, including the presumption of innocence and the principle against self-incrimination. The defendants contend that the Contempt Motion must be stayed as a result of these Charter breaches, or at the very least the plaintiffs should not be permitted to rely upon the evidence that was derived from these Charter breaches, with the result that the plaintiffs cannot meet their onus of proof of the further allegations of contempt and the Contempt Motion should be dismissed.

[5] For the reasons explained in this endorsement, the defendants have been found to be in contempt of the Trial Decision in some respects, but not on all of the grounds alleged by the plaintiffs. Some of the defendants’ Charter rights were breached by the manner in which the Contempt Motion was pursued, rooted in the plaintiffs' refusal to provide the defendants with copies of the records obtained from the accountants for the Limited Partnerships and Former General Partners before the defendants elected to file evidence in response to the Contempt Motion and were cross-examined. While the remedy of a stay of the entire Contempt Motion is not warranted, those Charter breaches limited the evidence that the plaintiffs could rely upon in support of the Contempt Motion, which in turn curtailed the court’s findings of contempt and may have implications for the court’s eventual determination of the appropriate sanction and costs.

The Trial Decision: Orders and Directions

[6] The plaintiffs were successful in obtaining the relief they sought in the Trial Decision. That relief included declarations that the Tridelta General Partners (plaintiff General Partners) were appointed and that the Former General Partners (defendant General Partners, defined in the Trial Decision as the Original General Partners) were removed as the general partners of the Limited Partnerships, as of May 10, 2023. The Trial Decision also included the following directions (at sub-paragraphs 225 (d), (e) and (f)):

a. That the Original General Partners deliver all of the books, records, accounts, and assets of the Limited Partnerships to the Tridelta General Partners, subsequently confirmed to include, without limitation:

i. the share certificates for the special shares owned by the Limited Partnerships in 320 Bronte Road Inc., 253 Queen Street Inc, and 27 Harwood Avenue Inc.;

ii. the general ledger of the Limited Partnerships;

iii. bank records in respect of any bank account in or through which the Limited Partnerships’ business was conducted, or were used to hold the assets of the Limited Partnerships;

b. That the Original General Partners cease representing and asserting to counter-parties of the Limited Partnerships and other third parties that they continue to act as general partners of the Limited Partnerships; and

c. That the Original General Partners provide an accounting of any payments or funds that they have received from the Limited Partnerships after April 8, 2021.

[7] Further clarifications of the declarations and directions contained in the Trial Decision to carry the Trial Decision into operation were provided in subsequent endorsements, as r. 59.06 contemplates may be done by the trial judge. See Jeffery v. London Life Insurance Company, 2018 ONCA 716, 26 C.P.C. (8th) 1, at paras. 84–86.

[8] On October 11, 2023, the court recorded that, “[t]he defendants have committed to deliver by October 17, 2023 all of the books, records, accounts and assets of the limited partnerships and the accounting of any payments or funds received by the (now former) Original General Partners from the Limited Partnerships from and after April 8, 2021” in accordance with the Trial Decision (see para. 225). It was contemplated that there might be rolling production of the contemplated records, as they became available.

[9] The defendants disclosed that many of the Limited Partnership records were in the possession of their accountants (Yale PGC LLP, “Yale”). Yale claimed to be receiving conflicting instructions from the plaintiffs and defendants about the delivery of these records to the Tridelta General Partners. The court directed on October 11, 2023 that the parties attempt to agree upon instructions to be given to Yale so that they could hand over whatever accounting records they had for the Limited Partnerships. Despite this, there continued to be reluctance on the part of Yale to hand over records that had not been approved by the defendants, in part because Yale also acts as their accountants.

[10] At Yale’s request, the court eventually made a further order and direction based on wording provided by the parties. This was contained in the court's endorsement dated November 27, 2023 arising out of the November 23, 2023 case conference (the “Yale Direction”):

Yale PGC LLP is directed to deliver forthwith to the plaintiffs all of the books, records, accounts and assets (“records”) in its possession relating to any services it provided to or on behalf of the Limited Partnerships from 2017 to the present. For greater clarity, if Yale PGC LLP has in its possession any general ledgers that it received from, or prepared or maintained for, any of the Limited Partnerships and/or copies of any banking records for any bank accounts that were used to hold the assets or conduct the business of the Limited Partnerships, those should be included in the records that it provides to the plaintiffs.

[11] The court also clarified in its November 27, 2023 endorsement that the Trial Decision unquestionably entitles the plaintiffs to be provided with the bank records in respect of any bank account in or through which the Limited Partnerships’ business was conducted, which if not available from the defendants or Yale, might need to be obtained directly from the banks.

[12] There was a further clarification on January 5, 2024 in an oral ruling given by the court that, to the extent the Limited Partnership records had been transmitted by a representative of the defendants using their email account (the only email account through which they conducted the business of the various entities that they controlled, including the Former General Partners), those records were covered by the Trial Decision and had to be produced.

Events Occurring After the Trial Decision

[13] Following the Trial Decision, on October 17, 2023 the defendants delivered to Tridelta three binders (one for each Limited Partnership) containing 64 documents that they represented were all of the books and records of the Limited Partnerships in their power, possession, or control (the “Defendants’ Initial Production”). These binders purported to be the defendants’ compliance with the Trial decision. Many of the documents in this binder had already been produced by the defendants.

[14] The defendants advised that they did not maintain physical or electronic copies of the accounting records for the Limited Partnerships. However, they claimed to have provided those records to their accountants at Yale for their audit or review engagements and also claimed that Yale had been involved in the preparation of the general ledgers for the Limited Partnerships and was maintaining those accounting records.

[15] At the November 23, 2023 case conference, the defendants took the position that they were in full compliance with the Trial Decision, despite having produced no financial records or any records after 2018 and having produced nothing from Yale. The court made the Yale Direction on November 27, 2023.

[16] The defendants took the position that the only recourse available to the plaintiffs if they were displeased with the defendants’ compliance with the Trial Decision was to bring a contempt motion. At the next case conference on December 6, 2023, the Contempt Motion was scheduled for January 5, 2024 and pre-hearing steps were timetabled. The timetable provided for the delivery of the plaintiffs’ motion record for the Contempt Motion on December 13, 2024. The parties and the court were advised on December 6, 2023 that Yale would be complying with the Yale Direction.

[17] Over the course of December 12–14, 2023, Yale delivered documents directly to Tridelta pursuant to the Yale Direction (the “Yale Production”). In the meantime, without having received the complete Yale Production or reviewing what had been provided, Tridelta delivered its Contempt Motion record on December 13, 2024. The Yale Production was not referenced in the plaintiffs’ contempt motion materials.

[18] The plaintiffs accused the defendants of “continuing to interfere with the delivery of documents from Yale” and alleged that the defendants had refused to deliver the general ledger, any bank statements, any tax records, any accounting backup, any agreements or other operational records in respect of the Limited Partnerships.

[19] On December 13, 2023, the defendants requested disclosure from Tridelta of the Yale Production pursuant to R. v. Stinchcombe, [1991] 3 SCR 326 (the “Disclosure Request”). The plaintiffs took the position that they were not required to deliver the Yale Production to the defendants and refused to do so.

[20] The defendants elected to call evidence in response to the allegations of contempt by the plaintiffs and delivered their materials in response to the Contempt Motion on December 19, 2023, in accordance with the court’s endorsed timetable. This material included an affidavit sworn by a representative of the defendants on December 19, 2023. The representative was cross-examined on December 21, 2023.

[21] During the cross-examination, the representative was asked about the books and records of the Limited Partnerships, including about their general ledgers and financial statements, without being shown any of the Yale Production that the plaintiffs had received. The Yale Production was not referred to.

[22] On January 5, 2024, the defendants raised concerns that they have not received the Yale Production despite their Disclosure Request. The court ordered the plaintiffs to provide the Yale Production to the defendants by January 10, 2024. The Contempt Motion was adjourned, in part to afford the defendants the opportunity to see what was in the Yale Production.

[23] At the January 5, 2024 hearing, the court found, on a preliminary basis, that it was clear, from the defendants’ own position, that they had not complied with the Trial Decision because they were taking too narrow an interpretation of it in the following respects:

a. the defendants had not handed over the share certificates representing the units held by the Former General Partners in the Limited Partnerships;

b. the defendants had not produced any banking records for the bank accounts through which the Original General Partners conducted the business of the Limited Partnerships;

c. the defendants had not produced the financial records of the Original General Partners; and

d. the defendants had not produced any of the email communications undertaken by or in respect of the business of the Limited Partnerships that the defendants had or could obtain, for example through the representative's email account. This was the email account through which the representative admitted they conducted the business of all of the companies that they control, including the Former General Partners whose sole “raison d’etre” was to manage the business and operations of the Limited Partnerships.

[24] At the January 5, 2024 hearing, the court expressed disapproval of the narrow interpretation of the Trial Decision that the defendants had adopted by attempting to maintain a distinction between the records of the Limited Partnerships and those of the Former General Partners and by withholding banking records, financial statements, financial records or other records of transactions that they conducted on behalf of the limited partnerships on that basis:

This is not a matter of respecting corporate separateness. The Original General Partners were a party to this proceeding and a direct order was made against them to deliver all of the limited partnerships’ books, records, accounts and assets. To suggest that anything could be withheld on the basis that they were records in the name of the general partners is disingenuous, to say the least. They, the Original General Partners, existed for a singular purpose and all records they created fall within the scope of that purpose: for the business of the limited partnerships. They must deliver up what they have.

[25] The court reiterated that the defendants were obligated to produce all documents in their possession or that they could reasonably obtain, relating to the Limited Partnerships and the conduct of their business.

[26] At the conclusion of the January 5, 2024 hearing, the defendants were ordered to remedy their non-compliance by January 22, 2024 (the “Non-Compliance Order”) and the parties were directed to return on January 25, 2024 to provide a report about what has or has not occurred (a “Compliance Report”). The court indicated that it would thereafter decide whether to issue further reasons or make any findings of contempt based on the submissions made at the January 5, 2024 hearing, and anything further that came to light from the Compliance Reports.

[27] In the court’s January 5, 2024 oral ruling, the court found that the defendants had not complied with the Trial Decision, but deferred making any finding about whether the defendants were in contempt of the Trial Decision. The court reserved its discretion regarding any finding of contempt, with reference to Carey v. Laiken, 2015 SCC 17, [2015] 2 S.C.R. 79, at para. 37.

[28] As directed, Tridelta delivered the entirety of the Yale Production to the defendants on January 10, 2024. Also as directed, the defendants delivered additional documents to the plaintiffs on January 22, 2024 (the “Defendants’ January Production”).

[29] The parties each filed a Compliance Report in advance of the January 25, 2024 appearance setting out their positions about whether the defendants had, or had not, complied with the Trial Decision. Tridelta also provided a supporting affidavit relying upon the Yale Production and the Defendants’ January Production, that highlighted examples of what the plaintiffs considered to be further evidence of the defendants’ non-compliance with, or contempt of, the Trial Decision.

[30] On the morning of the January 25, 2024 hearing, the Defendants delivered a preliminary notice of motion seeking a stay of the Contempt Motion on the basis of alleged Charter violations in the reporting affidavit delivered by the plaintiffs, which relied upon the Yale Production that the plaintiffs had not received until January 10, 2024. The Stay Motion also raised concerns about the sufficiency of the “hearsay” evidence that the plaintiffs were relying upon in support of the Contempt Motion. The court concluded that the Contempt Motion could not proceed on January 25, 2024 in the face of the defendants’ Stay Motion.

[31] The Stay Motion was scheduled for the same day as the return of the Contempt Motion, on April 23, 2024 [^2], so they could be heard together. After setting a timetable for briefing the Stay Motion, the court observed that this delay afforded the plaintiffs the opportunity to obtain direct evidence of any alleged continuing contempt, in so far as it arises out of productions received since the last appearance and does not amount to splitting their case. It was contemplated at that time that there might be a r. 39.03 examination of a representative of Yale and a further examination of the defendants' representative as part of the plaintiffs’ response to the Stay motion.

[32] The defendants took more than six weeks to finalize and serve their motion record for the Stay Motion. A case conference was convened on April 5, 2024 to address concerns arising from an affidavit that had been delivered by the defendants, which they were granted leave to withdraw. As a result of that, and some other scheduling issues, the two motions were adjourned to May 30, 2024.

[33] During the April 18, 2024 examination of a representative from Yale, the defendants became concerned that the plaintiffs were seeking to elicit evidence probative of the allegations of contempt, which the defendants contend was contrary to the rule against case-splitting and other Charter protections. The defendants served a second Notice of Motion for a stay of proceedings and the parties returned to court on a further case conference. On May 7, 2024, further directions were provided by the court in respect of the r. 39.03 examination of the Yale representative, which then continued and was completed on May 21, 2024. The defendants were granted leave on May 7, 2024 to expand the grounds upon which they were seeking a stay to include the concerns raised about case splitting by the plaintiffs that arose during the r. 39.03 examination of the Yale representative.

The Stay Motion

[34] Given the nature of the relief sought and its implications for the Contempt Motion, the Stay Motion will be considered first.

Applicable Charter Protections

[35] The defendants repeatedly emphasized in their written and oral submissions that the Commercial List is not a Charter-free zone. The plaintiffs do not suggest that it is.

[36] A civil prosecution for contempt of court is a quasi-criminal proceeding. This is well established in the case law. Charter rights are protected in civil contempt proceedings. See for example, Carey v. Laiken, at para. 42; Toronto Transit Commission v. Ryan (1998), 37 OR (3d) 266 (Gen. Div.), at para. 13; 2363523 Ontario Inc. v. Nowack, 2016 ONCA 951, 135 O.R. (3d) 538, at para. 37; Sakab Saudi Holding Company et al v. Al Jabri et al, 2024 ONSC 1347, at para. 67; Jackson v. Jackson, 2016 ONSC 3466, at para. 55.

[37] Section 7 of the Charter guarantees individuals the right to life, liberty, and security of the person, and the right not to be deprived thereof except in accordance with the principles of fundamental justice. This includes the right to a fair trial and the right to make full answer and defence. See R. v. Seaboyer; R. v. Gayme, [1991] 2 SCR 577, pp. 607–608.

[38] The right to make full answer and defence is integrally linked to the presumption of innocence and the principle against self-incrimination as protected by s. 7, as well as the right to a fair trial as protected by ss. 7 and 11(d). See R. v. Rose, [1998] 3 SCR 262, at para. 98. Section 7 applies only to individuals, whereas s. 11(d) applies to both individuals and corporations. See R. v. CIP, [1992] 1 SCR 843, pp. 852, 854–55, 859.

[39] Every alleged contemnor is afforded the same Charter protections as an accused, regardless of the penalty sought by the prosecuting party. For example, persons cited for civil contempt cannot be compelled to testify: see Vidéotron Liée c. Industries Microlec produits électroniques Inc., [1992] 2 SCR 1065.

[40] The right to remain silent applies in cases involving civil contempt unless, as a practical matter, the alleged contemnor would have to testify in order to raise a reasonable doubt in the face of a strong evidentiary case against them. See Nowack, at paras. 37 and 40.

[41] The right to make full answer and defence also includes the right to full and timely disclosure, the right to know the case to be met before opening one’s defence, and the principles governing the re-opening of the prosecuting party’s case (and against case-splitting). See Rose, at para. 98.

[42] Hearing fairness can be compromised when the defendant’s ss. 7 and 11(d) rights (including, inter alia, the right to make full answer and defence, the right to know the case to meet before opening one’s defence, and the principle against self-incrimination) are infringed. See R. v. Brunelle, 2024 SCC 3, 92 C.R. (7th) 219, at paras. 27–28; Rose, at para. 98.

The Test for a Stay

[43] In determining whether to enter a stay for Charter breaches such as are alleged here, where prosecutorial conduct is alleged to have compromised the fairness of a defendants’ trial for contempt (here, the Contempt Motion), the question is whether the defendant’s right to a fair hearing has been prejudiced and whether that prejudice will be carried forward through the conduct of the Contempt Motion; in other words, whether the unfairness is ongoing. See R. v. Babos, 2014 SCC 16, [2014] 1 SCR 309, at paras. 32–34.

Analysis of Charter Breaches

[44] The defendants allege that the plaintiffs withheld essential disclosure, depriving them of a fair hearing and of the ability to make full answer and defence, to know the case they had to meet and for the defendants' representative to exercise their right to remain silent and avoid subjecting themselves to self-incrimination. The plaintiffs are also accused of splitting their case on contempt by using the Yale Production that they withheld to bolster their original allegations of non-compliance after the defendants had provided their response to the Contempt Motion. This conduct is said to violate ss. 7 and 11(d) of the Charter and to constitute an abuse of process. The cumulative effect of these Charter violations is alleged to be so serious that it warrants a stay of proceedings and a dismissal of the plaintiffs’ Contempt Motion with prejudice under ss. 7 and 24(1).

a) Failure to Make Stinchcombe Disclosure

[45] The right to make full answer and defence includes the right to full and timely disclosure. See Rose, at para. 98. While Stinchcombe disclosure obligations on private parties in civil contempt proceedings are not absolute, full disclosure is expected in most cases. See Vale v. USWA Local 6500, et al, 2010 ONSC 3039, at para. 9. That includes both exculpatory and inculpatory disclosure and disclosure of materials whether or not the prosecution intends to rely upon it. See Stinchcombe, at p. 343.

[46] The defendants made the Disclosure Request for the Yale Production before their responding affidavit on the Contempt Motion was due. The Disclosure Request was denied by the plaintiffs. Without having the Yale Production, the defendants waived their right to silence and filed an affidavit from their representative in response to the Contempt Motion.

[47] The plaintiffs’ denial of the defendants’ Disclosure Request for the Yale Production breached the defendants’ Charter protected right to make full answer and defence, and their included right to full and timely disclosure.

[48] The Yale Production is highly relevant and should have been disclosed in a timely manner. The defendants’ primary defence to the Contempt Motion is that they say that they simply do not have anything more to deliver, beyond what has been provided. They expected many of the alleged deficiencies in their compliance with the Trial Decision would be satisfied through the Yale Production, and would be supplemented by the production that they requested from the banks and handed over to the plaintiffs following the court’s January 5, 2024 directions. Not having the Yale Production deprived them of an opportunity to substantiate key aspects of their defence.

[49] Further, if the Yale Production had been disclosed earlier, it would have been open to the defendants to remain silent and rely upon details from the Yale Production to challenge the sufficiency of proof of the alleged continuing contempt. The defendants point out that the Yale Production does not line up exactly with the plaintiffs’ assertions about certain types of accounting records that are still missing and could create a reasonable doubt that any other documents exist over and above what has been produced.

[50] Unlike the situation in Nowack, the defendants would not necessarily have had to waive their right to remain silent and put in evidence to respond to a contempt motion. Here, the defences of the defendants were largely predicated on their expectation that the alleged missing Limited Partnership records would be found in the Yale Production. While the parties do not agree about whether the Yale Production contains all of the documents and information that the plaintiffs allege the defendants have failed to deliver since the Trial Decision, it clearly contains some of it. The relevant documents might have been enough to rebut the inferences that the plaintiffs want the court to draw about the defendants withholding additional evidence.

[51] The plaintiffs’ primary response to the Stinchcombe disclosure issue is that the defendants could have obtained the Yale Production themselves following the Trial Decision, or could have moved to compel that production before responding to the Contempt Motion as was done for example in Vale. The plaintiffs argue that the election by the defendants to waive their right to remain silent was made at their own peril.

[52] Even if an alleged contemnor could bring a motion for disclosure (as they did in Vale) or independently obtain the same documents, that does not relieve the party prosecuting the contempt from their disclosure obligations. Here, the disclosure of the Yale Production was eventually ordered, but it was in the face of the Stay Motion and after the deadline for delivery of the responding materials had passed and the defendants had elected to waive their right to remain silent and been cross-examined.

[53] In the context of the Contempt Motion, the defendants should not have had to ask but, at a minimum, when the plaintiffs received the Disclosure Request (before the defendants' responding material on the Contempt Motion was due) they should have disclosed the Yale Production to the defendants.

[54] The plaintiffs’ failure to do so violated the Defendants’ ss. 7 and 11(d) Charter rights, specifically the defendants’ rights against self-incrimination (to remain silent), to make full answer and defence and to a fair hearing regarding their alleged contempt.

b) Case Splitting

[55] The rule against case splitting requires that the prosecuting party establish the “case to meet” before there can be any expectation that the defendant should respond. See R. v. P(MB), [1994] 1 SCR 555. Case-splitting directly engages multiple Charter rights protected under ss. 7 and 11(d). Section 7 protects the right to make full answer and defence, which is integrally linked to the right to a fair trial. It is both a principle of fundamental justice and a standalone right under s. 11(d).

[56] In civil contempt that means that “everything must be set out in either a motion or the affidavits to be read in support of a motion before an alleged contemnor must make the decision whether to answer what is alleged and, if so, what answer will be given.” See Telus Communications Re: Ruling No 1, 2006 BCSC 12, 26 C.P.C. (6th) 388, at para. 19.

[57] The plaintiffs expanded their case after the defendants had decided how to answer. The plaintiffs relied upon the Yale Production in the January 24, 2024 affidavit that accompanied their Compliance Report for the January 25, 2024 attendance. That affidavit did not just address compliance with the court’s January 5, 2024 directions but sought to reinforce the alleged grounds for the Contempt Motion. They used the Yale Production that they received between December 12 and 14, 2023 to establish new grounds for broader allegations of alleged misuse of Limited Partnership assets and funds, which were said to undermine the credibility of the defendants and their trial testimony.

[58] Similarly, many of the exhibits put to the Yale representative when they were examined by the plaintiffs came from the Yale Production and targeted the defendants’ compliance with the Trial Decision and their credibility.

a. For example, the Yale representative was questioned about whether Yale had been engaged to prepare the general ledgers for the Limited Partnerships and whether copies of the general ledgers were contained in the Yale Production (the defendants' representative claimed in their affidavit in response to the Contempt Motion that Yale had assisted with the preparation of the general ledgers and would have copies of them).

b. The plaintiffs also sought to elicit evidence from the Yale representative to support their allegations that the defendants were in contempt of the Trial Decision for interfering (or not co-operating) with the plaintiffs’ efforts to obtain the Yale Production.

[59] The case splitting compounded the first Charter breach of failing to make Stinchcombe disclosure of the Yale Production. The plaintiffs attempted to split their case by using the Yale Production to elicit further evidence in support of the Contempt Motion after the defendants had elected to testify and had delivered their responding affidavit and been cross-examined on it.

[60] The defendants’ January Production contained a number of documents, including financial records that Tridelta had never seen before. There were legitimate areas of follow up or reply arising out of this. The defendants are not advancing a Charter challenge about the process under the Rules of Civil Procedure that would allow a third party to be examined to elicit evidence in support of a motion (even a contempt motion) after the parties have exchanged their affidavits. The plaintiffs could have examined the Yale representative after the defendants’ responding motion record was delivered but before the defendants' representative was cross-examined. The defendants’ objection here is to the fact that the Yale representative was examined about the Yale Production and matters relied upon in support of the Contempt Motion after the defendants' representative was cross-examined.

[61] The plaintiffs say that the Yale Production took on a new light only after they reviewed the Defendants’ January Production. After that production was delivered the defendants insisted that they had complied with the Trial Decision by disclosing (directly, or through Yale) all available partnership records. However, the Defendants' January Production contained some financial statements that the plaintiffs noted did not reflect information that was contained in the Yale Production, including certain invoices and payments to other entities affiliated with the defendants. That is what the plaintiffs say led them to go back to the Yale Production and ask the Yale representative about these transactions. This exemplifies the problem of the Stinchcombe disclosure breach. If the Yale Production had been provided to the defendants before they responded to the Contempt Motion and before the defendants' representative was cross-examined, these might have been legitimate areas to explore.

[62] To withhold the Yale Production and the attempt to use it later to show the defendants are in contempt of the Trial Decision is not proper reply. The prosecuting party may adduce reply evidence if it was not initially probative of the alleged contempt and was only directed at an issue put in play by the defence case. But expanding the allegations after the defence has advanced its case is not legitimate reply evidence. See R. v. R.D., 2014 ONCA 302, 120 O.R. (3d) 260, at paras. 17–19. The way the plaintiffs conducted their prosecution effectively does so — the plaintiffs say we do not have records from you, the defendants say we have provided what we have and then the plaintiffs challenge that position by pointing to documents not previously disclosed that suggest there may be further undisclosed records of specific transactions.

[63] The plaintiffs provide yet another explanation why their lines of questioning during the Yale representative’s examination was necessary. They acknowledge that these questions may have had the ancillary effect of bolstering their position on the Contempt Motion. But they argue that they had to ask these questions, as permitted under the court’s timetable, to respond to the allegations made in support of the Stay Motion that the plaintiffs had misled the court on January 5, 2024 about what was contained in the Yale Production. There may be some legitimate areas of cross-over in the evidence for these two motions, but the problem of trying to disentangle all of this could have been avoided if the plaintiffs had just disclosed the Yale Production when it was received. That is the root of the problem and the plaintiffs are responsible for that.

[64] The plaintiffs also place reliance upon a letter dated February 25, 2024 from Yale that explains what Yale located and produced in the Yale Production (that the Yale representative was examined upon). They say reference to that letter could not be case splitting because the letter did not exist until after the party’s affidavits and cross-examinations had taken place. That may be true, but the letter is simply an advance summary of the evidence that could have been elicited at any time from the Yale witness when they were examined, and that examination should have taken place before the defendants' representative was cross-examined.

[65] The failure to disclose the Yale Production to the defendants in advance of the delivery of the defendants’ responding materials for the Contempt Motion and in advance of the cross-examination of the defendants' representative on the Contempt Motion, and the use of that material afterwards to support the Contempt Motion (even if also to respond to the Stay Motion) breached the defendants’ rights against self-incrimination (to remain silent), to make full answer and defence and to a fair hearing regarding their alleged contempt, in breach of ss. 7 and 11(b) of the Charter.

[66] As a practical matter, if the timetable for the briefing of the Contempt Motion was too compressed to allow for the timely disclosure of the Yale Production when it was received in mid-December (the timing of which was not within the control of any of the parties by that time) then the appropriate thing to do would be to make the disclosure to the defendants and either agree on adjustments to the timetable to and/or re-attend for further directions from the court. Charter issues such as these do not routinely come up in the commercial court. However, they are taken seriously when they do.

Remedy for Charter Breaches

[67] Once a Charter breach and abuse of process has been established it must be clear there is no alternative remedy before a stay will be granted. A stay of proceedings is only appropriate where the case crosses the “high threshold of being one of the ‘clearest of cases’”. In order to obtain a stay, the party must meet the following test:

a. there must be prejudice to the right to a fair trial or to the integrity of the justice system that “will be manifested, perpetuated or aggravated through the conduct of the trial, or by its outcome”;

b. there must be no alternative remedy capable of redressing the prejudice; and

c. where there is still uncertainty over whether a stay of proceedings is warranted after steps 1 and 2, the court is required to balance the interests in favour of granting a stay, such as denouncing misconduct and preserving the integrity of the justice system, against “the interest that society has in having a final decision on the merits”.

See Brunelle, at para. 29.

[68] The prejudice to the defendants’ right to a fair trial and the unavailability of an alternative remedy are related here. The defendants cannot “un-waive” their right to silence and rebuild their defence. The defendants cannot go back in time and elect not to call evidence in light of the Yale representative’s testimony and the Yale Production.

[69] The plaintiffs say that any prejudice associated with their failure to give the Yale Production to the defendants earlier (before the defendants elected to file evidence in response to the Contempt Motion) is mitigated by what transpired afterwards. The plaintiffs complied with the court’s direction to provide the Yale Production and to adjourn the Contempt Motion to allow the defendants the opportunity to review the Yale Production and make any submissions they wished to make about it.

[70] In the normal course of civil proceedings indefensible positions regarding production, such as the plaintiffs’ initial refusal to disclose the Yale Production, can usually be brought into conformity by an order for production and an adjournment, without creating any substantive or procedural harm. In the context of the Contempt Motion, however, the harm cannot be undone once the party accused of contempt has waived their right to remain silent and testified and responded without having full disclosure of the evidence eventually sought to be put against them. This is because the later the disclosure, the more likely it is to cause substantial prejudice to trial or hearing fairness.

[71] The Supreme Court of Canada made this point in the context of Crown applications to re-open a criminal trial in R. v. G(SG), [1997] 2 SCR 716 (at para. 30):

The ambit of a trial judge’s discretion to allow the Crown to reopen its case becomes narrower as the trial proceeds because of the increasing likelihood of prejudice to the accused’s defence as the trial progresses. During the first stage, when the Crown has not yet closed its case, the trial judge’s discretion is quite broad. At the second stage, which arises when the Crown has just closed its case but the defence has not yet elected whether or not to call evidence, the discretion is more limited. Finally, in the third phase — where the defence has already begun to answer the Crown’s case — the discretion is extremely narrow, and is “far less likely to be exercised in favour of the Crown”. The emphasis during the third phase must be on the protection of the accused’s interests. See P. (M.B.), at p. 570.

[72] The late disclosure of the Yale Production in this case occurred in the third phase (on January 10, 2024 pursuant to the court’s January 5, 2024 direction), after the defendants had answered the plaintiffs’ allegations of contempt and had been cross-examined upon them. The concerns are most marked in the third stage disclosure. According to the Supreme Court of Canada in G(SG), at para. 38, the right of the accused not to be conscripted against themselves is at stake at this stage because of the risk that the Crown will seek to fill gaps and correct mistakes based on what it has heard from the defence; allowing the Crown to do so also implicates the right to make full answer and defence and the general right to a fair trial.

[73] The plaintiffs rely on the comment from the Supreme Court of Canada in the later decision of R. v. Bjelland, 2009 SCC 38, [2009] 2 S.C.R. 651, at para. 26, that even “where the evidence is produced mid-trial after important and irrevocable decisions about the defence have been made by the accused”, it is for the accused to demonstrate how the late disclosed evidence would have affected the decisions that were made. The plaintiffs are correct that a complete cure is not always required and a stay is not necessarily warranted.

[74] The party raising the Charter challenge has the onus of proving its entitlement to the requested remedy. But this does not mean that the accused need demonstrate anything more than that they could have referred to the evidence to support their position, or provided explanations if it detracted from their position. The defendants in this case have gone at least that far. They demonstrated that the content of the Yale Production affects their defences and that it could have affected their election to waive the right to silence. Furthermore, this is not a case like Bjelland where the decisions that were alleged to have been affected by late disclosure were either made with the knowledge that disclosure was forthcoming (here, in contrast, their Disclosure Request had been refused), or were not protected by the right to make full answer and defence. See Bjelland, at paras. 31-32.

[75] The objective of the Contempt Motion, of achieving compliance with the court’s previous orders, remains an important consideration in the balancing of interests. In support of their request for a stay, the defendants argue: “There is no need to continue this contempt proceeding on the merits. The ultimate purpose of contempt proceedings is to ensure compliance. With the benefit of this court’s clarifying endorsement on January 5, 2024, the Defendants have brought themselves into compliance with the September 18, 2023 Order and subsequent endorsements.”

[76] However, contempt proceedings also serve to ensure that the court’s process is respected more generally. Opportunistic litigants should not be allowed to wait and see if a contempt motion will be brought and only then cure their non-compliance under the threat of contempt. In my view, the alternative remedy of disregarding any evidence the court determines to be derived from the late-disclosed Yale Production and case splitting addresses any continuing prejudice while preserving the court’s ability to ensure that its process is respected and adhered to by the defendants. In the civil contempt context, the court has refused to admit proffered supplementary affidavits that were found to amount to improper case splitting. See Telus Communications Re: Ruling No. 1, at para. 21. Even in criminal cases, the court has the discretion to rule on the admissibility of rebuttal evidence involving case splitting. See G. (S.G.), at para. 39.

[77] The non-reliance (as opposed to stay) alternative relief is set out in the defendants’ notice of motion on the Stay Motion in sub-paragraph (b). Specifically, they ask that certain paragraphs of the Paul Simon affidavit(s) relied upon by the plaintiffs in support of the Contempt Motion be struck. They also seek to exclude the evidence of the Yale representative relating to exhibits listed in Schedule D to the defendants’ factum on the Stay Motion from consideration on the Contempt Motion. Rather than striking this evidence, it will be disregarded for purposes of the Contempt Motion, since it is part of the record for the Stay Motion as well. The court will not consider any of the Yale Production or evidence about it on the Contempt Motion.

[78] Insofar as the defendants are suggesting that a remedy is required to redress harm from Charter breaches at the January 5, 2024 hearing, I disagree. The findings at the January 5, 2024 hearing about the defendants’ non-compliance with the Trial Decision were about records that the defendants had and could provide to the plaintiffs, but had decided not to provide (not about things they were saying they could not provide because they did not have them). The findings of non-compliance with the Trial Decision made at the January 5, 2024 hearing were made without reference to (or knowledge of) anything contained in the Yale Production. They fall outside of the Charter breaches and are not tainted by them.

The Contempt Motion

[79] The ultimate goals of the court on a contempt motion are to ensure compliance with orders that have been made and to ensure that the court’s process is respected.

The Issues on the Contempt Motion

[80] The issues that the court must decide on the Contempt Motion are whether:

a. the defendants breached their obligations under the Trial Decision; and

b. the court should make a finding of contempt.

[81] Any sanction for a finding of contempt shall be determined at a later sanction hearing, if required.

[82] With the benefit of the court’s ruling on the Stay Motion, there remain two aspects of the Contempt Motion for the court to consider:

a. First, whether a finding of contempt should be made in respect of the determinations made by the court on January 5, 2024 that the defendants had not complied with the Trial Decision in the specific areas identified.

b. Second, whether there are grounds for making further findings of contempt based on the record before the court, excluding the evidence that has been ruled inadmissible due to the Charter breaches that have been found.

[83] With respect to the second aspect, the other areas of non-compliance that the plaintiffs focused on at the continuation of this Contempt Motion are:

a. The failure by the defendants to disclose complete financial, accounting and tax records in respect of the Limited Partnerships, including,

i. the general ledgers of the Limited Partnerships, which the plaintiffs maintain (and the Yale representative confirmed) are not included in the Yale Production and would have come from a source file provided by the defendants or their bookkeeper;

ii. source documents for income tax filings.

b. The failure by the defendants to deliver any contracts, agreements, or other records substantiating their relationship with Manna and Mypta - affiliates that appear from the Yale Production records to have received hundreds of thousands of dollars in Partnership funds.

c. The refusal of the defendants to execute notices of assignment and letters of directions to allow the complete disclosure of all banking records by the banks where the Former General Partners held accounts that were used for the business of the Limited Partnerships.

d. The refusal of the defendants to execute a general assignment of all property, assets and records of the Limited Partnerships.

The Test for Civil Contempt

[84] A finding of civil contempt has three elements which must be established beyond a reasonable doubt (see Carey, at paras. 32–35):

a. the order alleged to have been breached “must state clearly and unequivocally what should and should not be done”;

b. the party alleged to have breached the order must have had actual knowledge of the order; and

c. 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.

Preliminary Analysis of Contempt

[85] The first two requirements are not in issue with respect to the specific alleged instances of contempt of the Trial Decision that were argued on this Contempt Motion:

a. The Trial Decision clearly and unequivocally states what should and should not be done, specifically: deliver all of the books, records, accounts, and assets of the Partnerships to the Tridelta General Partners. To the extent clarifications were required, they have been provided through the court’s subsequent endorsements.

b. It is beyond doubt that the Former General Partners and their representative have actual knowledge of the Trial Decision. The representative expressly stated in their affidavit that they “reviewed [the Trial Decision] carefully and [...] accept[s] that the declarations and orders contained therein are currently applicable.” The second prong of the contempt test is clearly met.

[86] The focus of the remaining analysis will be on the third requirement, to determine whether the defendants intentionally failed to do what the Trial Decision compelled them to do.

[87] If they were in contempt of the Trial Decision as of the January 5, 2024 Non-Compliance Order, the defendants say they have purged that contempt. They ask the court to exercise its discretion and not find them to be in contempt for having interpreted the Trial Decision too narrowly. Objectively, they made an intentional decision not to produce records that they had. Subjectively, they say that was due to a misunderstanding on their part. In other words, they intended to withhold the records, but they say they did not intend to disobey a court order.

[88] The defendants also say they did not intentionally disobey the Trial Decision with respect to the financial, accounting and tax records in the possession of third parties:

a. Despite their initial reluctance, the defendants say they have now facilitated the Yale Production and production from the relevant banks and financial institutions. Admittedly, after the Trial Decision the defendants did not seek out these Limited Partnership financial, accounting and tax records from the third parties who had them, instead relying simply on the fact that they no longer possessed them. Since the Trial Decision did not order or direct them to obtain records from third parties they say they did not intend to disobey that order by not initiating those requests from third parties. Now that these records have been retrieved (albeit at the instance of the plaintiffs), the defendants still say they have nothing more to provide.

b. The documents sought regarding Manna, Mypta and the trust cannot be considered because of the Charter breaches and the court’s ruling on the Stay Motion.

[89] That leaves, in terms of the instances of further alleged contempt, the refusal of the defendants to execute a notice of assignment and letter of direction to the banks for the release of all banking records and a general assignment of all assets of the Limited Partnerships. The defendants have, with intent, refused to sign the notice of assignment and letter of direction to the banks or to the general assignment. They say these requests go beyond what the Trial Decision compelled them to do.

January 5, 2024 Findings of Non-Compliance

[90] The court has already found that it was clear that the four areas of non-compliance identified during the January 5, 2024 hearing were covered by the Trial Decision and should have been satisfied. The decision to narrowly (and incorrectly) interpret the Trial Decision was an intentional act that resulted in the defendants failing to do what they had been ordered to do. The court found at that time that the defendants’ position that records could be withheld because they were in the name of the Former General Partners “disingenuous, to say the least”. That view has not changed and it leads me to conclude that they did intentionally narrowly construe and fail to comply with the Trial Decision by withholding the records that they did eventually produce after the January 5, 2024 Non-Compliance Order was made.

[91] The court has the discretion not to find a party not to be in contempt even if they did not comply with a court order. See Carey, at para. 37. However, I am not inclined to exercise my discretion in favour of the defendants in this case. Their “misinterpretation” of the Trial Decision that led them to withhold the documents that they were directed to produce on January 5, 2024 was not reasonable. Rather, it was disingenuous.

[92] I find that the defendants were in contempt of the Trial Decision for their failure to initially obtain and produce themselves or provide authorization to the plaintiffs to obtain the banking records of the Former General Partners, their failure to deliver and assign the original share certificates of ownership of Limited Partnership units to the Tridelta General Partners, their failure to look for and produce emails from the defendants' representative’s email account involving the business of the Limited Partnerships, and their lack of co-operation (or even interference) with delivery of the accounting records of the Limited Partnerships in Yale’s possession.

[93] With the exception of the emails, the defendants have purged the original contempt. That may be a factor to be considered in connection with the sanction for their contempt.

[94] With respect to the emails, if the defendants are to be believed (based on evidence of their representative in their affidavit sworn in conjunction with their Compliance Report), the reason they do not have any emails is because they were destroyed in the normal course. The representative claims that they purged and deleted their emails periodically (every six months), including during the course of this litigation and during the period of the dispute that preceded it. That has potential other consequences, but without something further I am not able to conclude that there are emails that are being intentionally withheld in contempt of court now. As the defendants argued, an expectation that there should be some emails and none have been provided is not proof beyond a reasonable doubt that there are emails that are being withheld.

[95] This practice of destroying emails, as the defendants are aware, may be cause for separate proceedings in tort for spoliation (among other things), but is not a basis for a finding of contempt if they simply have nothing to hand over following the release of the Trial Decision in September 2023.

Additional Areas of Alleged Non-Compliance

[96] I will deal with each of the areas of alleged additional non-compliance in turn.

a) Missing Financial, Accounting and Tax Records

[97] The plaintiffs say they are focused on obtaining the information and records that they need to take over the management of the Limited Partnerships and to understand their current and historical finances. They say that, despite the obligations of the Former General Partners under s. 7.1 (a) of the LPAs to maintain the books and records of the Limited Partnerships for six years, and the defendants' representative’s trial testimony that they were doing so (particularly, their testimony that they had in their possession and were preserving the bank records and general ledgers of the Limited Partnerships), these were not produced in either the Defendants’ Initial Production or the Defendants’ January Production.

[98] No banking records, tax records, source documents or accounting records were delivered by the defendants in their two rounds of production since the Trial Decision, and none of the records they have provided are dated after 2018.

[99] The plaintiffs further rely on what has been disclosed from the Yale Production, and what is absent from those records, to support their position that the records are incomplete. They ask the court to infer that the defendants have intentionally withheld records (and in particular, the source documents and electronic versions of the general ledgers for the Limited Partnerships) and to find them in contempt for so doing.

[100] The defendants object to the plaintiffs relying on the contents of the Yale Production and the examination of the Yale representative in support of the Contempt Motion (for example, to establish that there were other electronic repositories of the accounting records and back up for general ledgers and income tax filings that were not maintained by Yale and that Yale no longer has access to) because of the Charter breaches. Without the Yale evidence, which the court has ruled cannot be relied upon in support of the Contempt Motion, there is not a sufficient evidentiary record from which to make a finding of contempt for the “missing records” that the plaintiffs insist must exist.

[101] Even if the Yale Production and examination of the Yale representative could have been relied upon to support the inference that the plaintiffs ask the court to draw, that there were at some point in time additional Limited Partnership records pertaining to the general ledgers, I am not persuaded that would be sufficient for a finding of contempt in any event. The evidence from the Yale representative about what source documents and other materials were provided (or created) by Yale in respect of the general ledgers is not entirely clear. There appears to be some confusion in terminology. Even if there were other records at the time, there is not a sufficient basis to make an inference now that they are being intentionally withheld or hidden and thus a finding of contempt is not available.

[102] For findings of civil contempt to be based on inferences drawn from circumstantial evidence, the inference of guilt or an essential element of the offence must be the only reasonable one to be drawn from the evidence as a whole. Sakab Saudi Holding Company et al v Al Jabri et al, 2024 ONSC 1347, at para. 42, citing R. v. Villaroman, 2016 SCC 33 at paras. 37 and 40–41. Here, the evidence advanced by the plaintiffs, even if it was admissible, is entirely circumstantial. The plaintiffs proffer no direct evidence that the defendants are in possession of, and are withholding, the general ledgers or source documents. While it may be reasonable to infer that these records existed and were in the possession of the defendants at one time, there are other possible inferences as to why they have not been produced now, including that they did not retain them.

[103] The fact that the defendants had an obligation to maintain the books and records of the Limited Partnerships and their representative even testified at trial that they had done so, does not mean that they necessarily still have them. The representative also testified that they believed these books and records were being maintained by Yale. It turns out that was not the case for all of them; however, that does not lead to the inevitable inference that the defendants are intentionally and knowingly withholding these books and records from the plaintiffs now.

[104] To be clear, even though they are not presently being found to be in contempt of the Trial Decision for not having provided the source documents and electronic versions of the complete general ledgers to the plaintiffs as a result of the Charter breaches and the exclusion of associated evidence, the defendants remain obligated to hand over any electronic accounting, tax and financial records that they have, or have access to. So, if there is a stored folder containing this information or other source documents, for example (and without limitation) documents used to prepare the financial statements or the income tax returns of the Limited Partnerships, there is no question that the Trial Decision requires the defendants to provide the access information and any necessary log in details to the plaintiffs so that they can obtain those records and source documents. Just because the court is not making a finding that the defendants are in contempt for not having done so up until now does not relieve them of the obligation to provide access to these records.

[105] Further, as was acknowledged by counsel for the defendants during the hearing, if these records existed and they were not preserved, the defendants may face further allegations of breaches of the LPAs and their other duties for failing to maintain those records. That is not the subject of this motion but is not foreclosed, nor do the Charter breaches affect the use of the evidence excluded on this motion for other such purposes.

[106] There are some additional instances of alleged contempt relating to missing financial, accounting and tax records that are not implicated in the Charter breaches associated with the Yale Production.

[107] The Defendants’ January Production included notices of assessment for the tax returns of the Limited Partnerships that were prepared and filed by Yale. Those should have been produced earlier and the full tax returns and supporting documents should also have been produced, or access to them should be made available to the plaintiffs. The defendants were in contempt for failing to have produced these earlier.

[108] After the defendants’ two tranches of productions, at the conclusion of the examination of the Yale representative on May 21, 2024, eight months after the Trial Decision, the defendants finally provided an unconditional authorization to Yale to produce to Tridelta all Former General Partner and Limited Partnership books and records, subject to an ongoing right to redact them to remove information relating to other entities. The plaintiffs say that this delay in providing the authorization to Yale to allow access to these records and the reservation of the right to first redact all records, is too little too late and is itself a basis for a finding of contempt on the part of the defendants that is untainted by the Charter breaches.

[109] This authorization to Yale should have been provided by the defendants long before May 21, 2024, and even before the court made the Yale Direction for disclosure of certain documents back in December 2023. The failure to give a timely authorization and direction to Yale to disclose records pertaining to the finances, accounting and taxation of the Limited Partnerships (and, by extension, the Former General Partners) is a basis for a further finding of contempt against the defendants, albeit a contempt that has been purged. Those records, even if held by Yale, belonged to the defendants and were within their power and control to deliver in compliance with the Trial Decision. They chose not to obtain those records or provide the plaintiffs with access to them. It is not the content of the Yale Production (which is tainted by the Charter breaches), but the failure of the defendants to have arranged for it in the first place, and their continued involvement in instructing Yale about what to hand over, that puts them in contempt of the Trial Decision with respect to the delivery of the financial, accounting and tax books and records of the Limited Partnerships and Former General Partners.

[110] The defendants' reservation of the right to redact is not unreasonable given that Yale’s services were engaged for many entities, beyond the Limited Partnerships and the General Partners. That reservation is not contempt as long as the redactions are done diligently and without interfering with or unduly delaying the transmission by Yale to Tridelta of relevant financing and accounting records. It may be that those records have by now already been provided, but that does not absolve the contempt, it only mitigates it for purposes of any sanction.

b) Dealings with Manna and Mypta

[111] The next area of deficiency for which a finding of contempt is sought arises from the failure of the defendants to deliver any contracts, agreements, or other records substantiating their relationship with their affiliates, Manna and Mypta.

[112] The accounting entries, invoices and cheques that the plaintiffs have obtained about the significant funds paid to the non-arm’s length entities referred to as Manna and Mypta came from the Yale Production. The defendants' representative was not asked to explain any of these documents or the relationship between the parties when they were cross-examined on the Contempt Motion in December 2023. Now the plaintiffs want the court to rely upon these documents from the Yale Production to find the defendants to be in contempt for not having produced or disclosed any documents about these non-arm’s length transactions, the implication being that they were attempting to hide them.

[113] Due to the Charter breaches, the foundational evidence for this finding of contempt (accounting entries, invoices and cheques from the Yale Production) cannot be considered or relied upon, and without it there can be no finding of contempt with respect to the absence of any documents relating to the dealings between the General Partners/Limited Partnerships and these non-arm’s length parties.

[114] As state above, and to be clear, even though the defendants are not presently being found to be in contempt of the Trial Decision for not having disclosed any documents relating to dealings between the Limited Partnerships (or on their behalf) with affiliates of the defendants such as Manna and Mypta, the defendants remain obligated to hand over all of the relevant records pertaining to the business of the Limited Partnerships which would include such documents if they exist. Their failure to do so could have further implications.

c) The Notice of Assignment and Letter of Direction to the Banks

[115] The next ground for the finding of contempt arises from the failure of the defendants to deliver all records related to all of the Former General Partners’ bank accounts and their refusal to sign the notices of assignment and letters of directions that authorize the banks to deal with the Tridelta General Partners through an assignment of the bank accounts to the Tridelta General Partners. The plaintiffs say that this refusal is contrary to the Trial Decision that requires the plaintiffs to deliver all books, records, “accounts” and assets. As early as November 27, 2023, the court alerted the defendants that the banking records might need to be obtained directly from the banks.

[116] After the January 5, 2024 hearing, the defendants did send directions to their banks and former banks requesting all banking records be sent to their own solicitors. One of the banks asked for, and was provided with, clarification about what the direction covered. The other did not. The defendants have confirmed in an affidavit that all records received from their banks in response to those directions have been provided to the plaintiffs.

[117] The plaintiffs are concerned that there are other records that have not been provided by the banks, based on their review of what has been provided. For example, the plaintiffs say that there are not many cheques in what has been handed over from the banks. Further, the plaintiffs say that the Defendants’ January Production discloses transactions in 2021 and 2022, yet the banking records produced thus far do not cover these periods of time.

[118] For example, the financial statements of the Former General Partners and Limited Partnerships (produced in the Defendants' January Production) disclose amounts payable by affiliates in this timeframe. The banking records in this time frame might disclose the transactions (transfers of funds) that led to those accounts payable.

[119] These examples establish that there could be additional records of transactions available from the banks and justifies the follow-up that the plaintiffs seek. None of these concerns are derived from evidence that is implicated in the Charter breaches.

[120] The plaintiffs would like to follow up directly with the banks about these further inquires. To ensure the delivery of all banking records and accounts, the plaintiffs requested that the Former General Partners sign a notice of assignment and letter of direction that informs the banks that the accounts and records of the General Partners (operating on behalf of the Limited Partnerships) now belong to the Tridelta General Partners so that the banks can deal with the Tridelta General Partners regarding these historic bank accounts that are inactive or closed.

[121] The defendants say they have produced all the banking records in their possession, and they cannot “assign” a bank account that does not exist. They also say that they were not explicitly ordered to sign letters of direction to the banks and therefore the plaintiffs should have, instead of including this as part of the Contempt Motion, sought a further order for directions under r. 59.06.

[122] The defendants’ response, that the accounts cannot be assigned because they are either closed or inactive, is highly technical and not in accordance with the spirit of the Trial Decision (typical of their general approach to disclosure in this case). Although the execution of notices of assignment and letters of direction to the banks of the Former General Partners was not expressly ordered in the Trial Decision, this court already held on January 5, 2024: “There is nothing equivocal or unclear about the court’s clarification in its November 27 endorsement.” The endorsement stated: “[T]he court’s trial decision unquestionably entitles the plaintiffs to be provided with the bank records in respect of any bank account in or through which the limited partnership’s business was conducted.”

[123] The Tridelta General Partners should have direct access to these records and the ability to follow up with the banks regarding what has been produced. That is what the proposed authorization letters achieve. The assignment of the “accounts” affords appropriate protection to the banks in dealing with the Tridelta General Partners and providing them with historic documents from these bank accounts. The assignment supplements and reinforces the authorization and direction to provide records directly to the Tridelta General Partners.

[124] While the Trial Direction did not expressly require the defendants to sign a notice of assignment and letter or direction, the court has already ruled that the defendants were obligated to obtain the records from the banks. They did thereafter sign and send directions for the delivery of the bank records to their lawyers in an effort to obtain the necessary records; however, the plaintiffs have established that these records may not be complete and that follow-up is needed with the banks. The plaintiffs should not have to come back to court for incremental directions about every nuance involving the manner of delivery of the books and records that the Trial Decision ordered.

[125] The requested notice of assignment and letter of direction to the banks is the next logical step to obtain the banking records and accounts that the Trial Decision ordered the defendants to deliver. Their refusal to sign this is another example of an unreasonably narrow construction of what the Trial Decision compelled them to do. I find the defendants to be in contempt for failing to provide the requested assignment and letter of direction to the banks.

d) Assignment of Assets

[126] The last category of contempt that the plaintiffs pursued on this motion was in relation to the defendants’ refusal to execute a general assignment of all of the property, assets, and records of the Limited Partnerships to the Tridelta General Partners.

[127] The Trial Decision clearly requires that the Former General Partners deliver all Partnership assets to Tridelta. Article 8.10 of the LPAs requires the Former General Partners to execute assignments to enable the Tridelta General Partners to become the assignee of the interest of the Former General Partners and the owners of the property of each Limited Partnership property.

[128] The defendants’ position is that unless and until the plaintiffs identify assets of the Limited Partnerships that have not been individually assigned or handed over, they should not have to sign the general assignment of assets and property. They say that the only “proven” asset of the Limited Partnerships are the shares, and they signed over and delivered those share certificates after January 5, 2024. On that basis, they say they should not be required to execute the general assignment of all assets. Put another way, they say that they can only be found in contempt for not executing the assignment of all other assets if the plaintiffs prove beyond a reasonable doubt that there are assets still left that have not been assigned.

[129] The defendants have it backwards. The Trial Decision ordered them to deliver all of the assets of the Limited Partnerships to the Tridelta General Partners. This is not an instance of looking beyond the four corners of the Trial Decision (and order) to determine what legal obligations the order creates, or implying terms into the order, for the purpose of a contempt proceeding as the defendants contend. Unlike in Gurtins v. Goyert, 2008 BCCA 196, 81 B.C.L.R. (4th) 81, at paras. 14-16 and Jackson v. Jackson, 2016 ONSC 3466, at para. 51, the order is clear that the assets must be delivered and a general assignment is precisely how that would be achieved. [^3]

[130] This is another instance of a too technical and narrow reading of the court’s order by the defendants. There is no objectively credible reason for them to refuse to execute a general assignment of the property and assets of the Limited Partnerships other than to avoid, or try to limit, the proper scope and effect of the Trial Decision. I find the defendants to be in contempt for their failure to sign the general assignment requested.

[131] I have found that the plaintiffs do not need to demonstrate that there are further assets to be assigned in order for the defendants to be found to be in contempt for not having executed the general assignment. While not required or relied upon, I note that this finding of contempt is supported by some of the other evidence that is not tainted by the Charter breaches. The defendants' representative swore in their December 2023 affidavit in response to the Contempt Motion that there are no other assets that “I understand to fall within the Trial Decision”. However, the financial statements in the defendants' January Production disclose amounts due from related parties in 2021 and 2022.

[132] These amounts payable might have been discounted as outdated or historic accounting entries but for the fact that the defendants directed the Court of Appeal to this “asset” and they were prepared to invite and allow the Court of Appeal to infer from these financial statements that the Former General Partners may still have assets in Ontario as part of their effort to avoid having to post security for costs for their appeal of the Trial Decision. This leaves unanswered the question of whether there are receivables owing from affiliates (which would be assets) that the defendants have themselves determined do not fall within the Trial Decision. The defendants have been found before (in the January 5, 2024 ruling) to have misconstrued what the Trial Decision requires. This is added support for the finding (above) that the defendants should have signed the general assignment requested and cannot rely upon their technical defence of there being no further assets to assign.

[133] I agree with the defendants that the other additional asset that the plaintiffs allege to have discovered, the “trust” evidenced by a trust agreement dated November 14, 2017 that was contained in the Yale Production but not mentioned on any financial statements produced, cannot be relied upon in support of the Contempt Motion because it is implicated in the Charter breaches. I have not considered that document or factored it into the decision regarding the defendants' contempt for failing to sign the general assignment. The implications of the existence, or non-existence, of this trust is an issue for another day.

Findings of Contempt

[134] The Supreme Court of Canada refers to civil contempt as an enforcement power of last resort. It is an exceptional remedy and should be “used cautiously and with great restraint”, not as a routine enforcement measure. See Carey, at para. 36.

[135] Trivializing the seriousness of contempt through inappropriate or overzealous use threatens to debase the notion of contempt. Invoking it too frequently might do more harm than good to the interests of justice. Lonneberg v. Onca, 2021 ONSC 4886, at para. 17, citing Centre commercial Les Rivières ltée c. Jean bleu Inc., 2012 QCCA 1663, at para. 7.

[136] The defendants themselves acknowledge that the purpose of the Contempt Motion is to ensure compliance with the Trial Decision. It is now more than eight months after the Trial Decision was rendered and the plaintiffs have been met with resistance from the defendants at every turn, having to return to court multiple times and eventually to bring the Contempt Motion, so that they can obtain all of the documents and records from the defendants that they need to operate and manage the business of the Limited Partnerships. The plaintiffs also appropriately re-focused the instances of alleged contempt and narrowed them down to four categories for purposes of this motion.

[137] This is one of those rare cases where invoking the remedy of civil contempt was appropriate and necessary to achieve compliance with the Trial Decision and the respect for the court's process that the defendants lack.

[138] The defendants are found to have been in contempt of the Trial Decision for the reasons outlined in the court’s January 5, 2024 ruling, and further confirmed in this endorsement. The defendants are also found to be in contempt of the Trial Decision for having failed to:

a. give a timely authorization and direction to Yale to disclose records pertaining to the finances, accounting and taxation of the Limited Partnerships (and, by extension, the Former General Partners);

b. execute the requested notices of assignment and letters of direction to the banks; and

c. execute a general assignment in favour of the Tridelta General Partners of the property and assets of the Limited Partnerships.

[139] On the other hand, the plaintiffs were overzealous and overstepped in the manner in which they prosecuted the contempt, and have been found to have committed Charter breaches in the process. That is not the fault of the defendants. The relief granted to the plaintiffs on the Contempt Motion has been curtailed as a result.

[140] We are at the point where the gamesmanship must stop. Tridelta needs to have access to the complete banking records, financial records, tax records, and assets of the Limited Partnerships, by whatever means are available to the defendants.

[141] The Supreme Court of Canada has held that a presiding judge may exercise their discretion to decline to impose a finding of contempt where it would work an injustice in the circumstances of the case. Carey, at para. 37. This is not a case in which I am prepared to exercise my discretion in favour of the defendants. The consequences of the Charter breaches are addressed in the decision on the Stay Motion and are not a reason to relieve the defendants of their contempt.

[142] The defendants have resisted fulfilling their obligations under the Trial Decision, only reluctantly doing so after multiple court attendances and directions. They invited this Contempt Motion when they took the position that the court was functus officio after the order from the Trial Decision had been signed, even though they now acknowledge that the court continued to have jurisdiction under r. 59.06 to provide directions to carry the Trial Decision into effect (after the court pointed that out). It suits them now to say that the proper approach for the plaintiffs to take should have been a r. 59.06 motion, but that was not their position back in November 2023 when the contempt motion was scheduled.

Contempt Findings Against the Defendants' Representative Personally

[143] It was noted in the court’s January 5, 2024 oral ruling that the defendants' representative was subject to the contempt proceedings personally, even though not a named defendant, by virtue of r. 60.11(6) “because they are the sole officer, director, shareholder and directing mind of the Original General Partners to which the Court’s orders apply”.

[144] Rule 60.11(6) specifically provides that where a corporation is in contempt, the judge may also make an order under r. 60.11(5) against any officer or director of the corporation. The defendants' representative is the lead officer, director, 100% owner and directing mind of the Former General Partners. It is clear that the representative is responsible for the Former General Partners’ compliance (or non-compliance) with the Trial Decision. Given the history of these proceedings, I find that a contempt order against them personally is necessary to compel compliance.

[145] Insofar as there are findings of contempt against the defendants, they apply equally to their representative.

The Defendants’ Conduct and Future Implications

[146] The court has continually emphasized the importance of compliance with its orders and directions (including the direction to Yale) at the various attendances since the release of the Trial Decision. Some of the defendants’ positions have led to findings of contempt and others have led to further orders and directions requiring them to do more to bring the Trial Direction into operation.

[147] Insofar as the Yale Production, the examination of the Yale representative and the Defendants’ Initial Production and January Production have led the plaintiffs to be concerned about the misappropriation of Limited Partnership funds, hidden assets, breach of trust, breaches of fiduciary duty, spoliation of assets (such as their failure to preserve emails, QuickBooks and other accounting records etc.), the parties both indicated at the hearing of these motions that those will be issues for another day. The pursuit of those allegations in the civil context still may leave the defendants with a lot to answer for.

Costs

[148] Each side has identified what they consider to be a pattern of improper conduct of the other throughout these proceedings:

a. The plaintiffs point to the unreasonably narrow interpretations that the defendants have consistently taken with respect to their production and disclosure obligations, which led to a contempt motion back in 2020 in relation to an earlier production order (that was eventually complied with before the motion had to be argued). The plaintiffs' positions regarding production and disclosure necessitated various orders and directions throughout the current proceedings, in order to extract the required production and disclosure. Now the defendants have been found to be in contempt.

b. The defendants point to the fact that they always complied when ordered by the court to do something, and that the plaintiffs often exaggerated the lack of disclosure, sometimes overreached, were not granted the full relief they sought, and committed Charter breaches in the prosecution of the Contempt Motion.

[149] My preliminary view is that substantial indemnity costs would be appropriate to award on both motions given the nature of the issues and findings: in favour of the plaintiffs on the Contempt Motion and in favour of the defendants on the Stay Motion. I have been unable to determine in my preliminary review of the costs outlines uploaded into CaseLines whether the costs claimed for the moving party on each motion are about the same, in which case the costs of these two motions may cancel each other out.

[150] If either side considers that there is a need for further cost submissions, a one-hour case conference may be scheduled before me in the normal course through the Commercial List office to seek leave and directions regarding any further cost submissions.

Final Disposition

[151] In summary, the following determinations are made in respect of the Contempt Motion and the Stay Motion:

a. On the Contempt Motion, the defendants have been found to have been in contempt of the Trial Decision as a result of the breaches identified in the court’s ruling on January 5, 2024 and the further breaches identified herein (summarized above in paragraph 138).

b. On the Stay Motion, the plaintiffs did not provide the required timely disclosure of the Yale Production before the defendants waived their right to silence and responded to the Contempt Motion. Further, the plaintiffs split their case on the Contempt Motion by waiting to conduct the examination of the Yale witness about the Yale Production until after they had cross-examined the defendants’ affiant on the Contempt Motion. These are Charter breaches but they do not warrant a stay of the Contempt Motion. The appropriate remedy on the Stay Motion is to preclude the plaintiffs from relying upon the Yale Production and evidence from the Yale witness in support of the further instances of alleged contempt. Without the excluded evidence, the plaintiffs were not able to meet their burden of proving beyond a reasonable doubt some of the alleged instances of contempt by the defendants.

c. The defendants must still comply with their obligations under the Trial Decision. To that end, and to carry the court’s orders into operation, the defendants are ordered and directed to:

i. Provide access to any electronic databases or online storage of accounting or tax records for the Former General Partners and the Limited Partnerships;

ii. Disclose trust documents and any contracts or agreements or other records involving payments or transfers of assets by or on behalf of the Limited Partnerships to affiliates of the Former General Partners;

iii. Execute the requested notices of assignment and letters of direction to the banks;

iv. Execute the requested assignment of assets and accounts in favour of the plaintiffs.

[152] I am not scheduling the sanction hearing for the Contempt Motion at this time. The defendants shall do what they have been ordered to do within 30 days of this decision. After that, a case conference may be scheduled before me to discuss whether a sanction hearing is needed.

Kimmel J. Date: July 10, 2024

[^1]: The parties appeared on: October 11, November 23, and December 6, 2023, January 25, February 8 (to settle trial judgment), March 28 (oral submissions on trial costs), April 5, and May 7, 2024. Most of these appearances were in relation to the Contempt and Stay Motions. [^2]: The return date was originally April 12, 2024 but, due to a scheduling conflict at the court, it was moved to April 23, 2024. [^3]: The execution of a general assignment is also consistent with Article 8.10 of the LPAs, that requires the Former General Partners to sign any documents reasonably requested to complete the assignment of the assets and property of the Limited Partnerships in a transition. That provision told them how to bring the Trial Decision into operation.