CITATION: Royal Bank of Canada v. Yates Holdings Inc., 2008 ONCA 474
DATE: 20080613
DOCKET: C47071
COURT OF APPEAL FOR ONTARIO
BORINS, MACPHERSON and GILLESE JJ.A.
BETWEEN:
ROYAL BANK OF CANADA and PRICEWATERHOUSECOOPERS INC. in its capacity as Receiver of the property, assets and undertakings of Yates Holdings Inc.
Applicants (Respondents on Appeal)
and
YATES HOLDINGS INC., YATES FAMILY BUSINESS TRUST, JB FOOD SERVICES INC. and JOHN YATES
Respondents (Appellants in Appeal)
D. McNevin and M. Packer for the appellants
D.J. Miller for the respondents
Heard: June 9, 2008
On appeal from the order of Justice Peter A. Cumming of the Superior Court of Justice dated April 2, 2007.
BY THE COURT:
[1] This is an appeal by John Yates, Debra Yates and the Yates Family Business Trust from the order of Cumming J. dated April 2, 2007 (the “Contempt Order”) in which John Yates and Debra Yates were found in contempt of an order of the Ontario Superior Court of Justice dated July 14, 2006 (the “July Order”). The July Order was not appealed.
[2] The appellants also seek leave to appeal the costs order dated April 18, 2007 made in respect of the contempt motion (the “Costs Order”) which requires that John Yates and Debra Yates pay the respondent, Royal Bank of Canada, costs of approximately $92,000.
THE CONTEMPT ORDER
[3] The law governing contempt of court is well settled. In Prescott-Russell Services for Children and Adults v. N.G. et al (2006), 2006 CanLII 81792 (ON CA), 82 O.R. (3d) 686 at para. 27 (C.A.), this court outlined the applicable criteria in the following terms:
(i) the order said to have been breached must state clearly and unequivocally what should or should not be done;
(ii) the party who disobeys the order must do so deliberately and wilfully; and,
(iii) the evidence must show contempt beyond a reasonable doubt.
[4] After reviewing extensive materials and hearing viva voce evidence from John Yates and Debra Yates over three days, the motion judge made the following findings:
(i) John Yates and Debra Yates were not credible in their explanations;
(ii) the documents and explanations given by the appellants in response to the contempt motion amounted to a quagmire of confusion;
(iii) the appellants knowingly and intentionally ignored the July Order until the contempt motion was brought;
(iv) John Yates and Debra Yates attempted to avoid the Bank’s enforcement of its rights by shifting assets into the name of Debra Yates and hiding assets; and,
(v) the Bank’s rights as a creditor were frustrated at virtually every turn.
[5] Each of these findings is amply supported on the record.
[6] At paras. 23 and 24 of the reasons, the motion judge concludes:
The evidentiary record establishes beyond a reasonable doubt that: (1) both Mr. Yates and Ms. Yates had knowledge of the nature of the terms of the July 14, 2006 Order (indeed, they filed responding materials and were represented by counsel at the time, although their counsel advised by fax July 13, 2006, he would not be attending July 14, 2006); (2) the July Order was directive and not merely permissive, and (3) their conduct was knowingly and intentionally in contravention of the July Order.
I find beyond a reasonable doubt that both Mr. and Mrs. Yates were in contempt of the July Order. Mr. and Mrs. Yates intentionally ignored the July Order until the motion for contempt was brought and first heard October 11, 2006.
[7] In so concluding, it is apparent that the motion judge applied the law in making a finding of contempt. In light of his findings, some of which are set out above, it is readily apparent that the third criterion was met. The extensive record before the motion judge demonstrated that the appellants had been given notice of the July Order and were well aware of its terms; four written requests had been made to the appellants’ counsel requiring compliance prior to the contempt motion material being served; the motion materials were served well in advance of the motion; at the first day of the hearing of the contempt motion, the appellants had provided no documents or information in respect of the July Order; and, at the conclusion of the contempt hearing two months later, the vast majority of the required documents and information had not been provided.
[8] In respect of the first two criteria, we acknowledge that the terms of the July Order are broad. However, the motion material provided a clear and unequivocal statement as to what information was necessary in order to fulfill the July Order. There could have been no uncertainty in the minds of the appellants as to what had to be done to fulfill the terms of the July Order, to prevent the contempt motion from proceeding or, once under way, what was required to purge their contempt.
THE COSTS ORDER
[9] The appellants contend that the motion judge failed to consider various relevant factors, including the Yates’ reasonable expectations as to the quantum of costs, when fixing costs. We see nothing in this submission.
[10] The appellants also allege that the quantum of the Costs Order was unreasonable given the evidence before the motion judge that the Bank’s costs were only just in excess of $50,000 in mid July of 2006. The motion judge was aware that the Bank estimated its costs in July of 2006 to be in the neighbourhood of $50,000. However, the motion judge was also aware of the work that was done on the contempt motion between July 2006 and April 18, 2007, the date on which he made the Costs Order. In this regard, it is useful to keep in mind that the two and a half day contempt motion - over which the motion judge presided - took place on October 11, November 28 and December 11, 2006.
[11] The following facts are also germane. The reasons for the Contempt Order fixed April 18, 2007, as the hearing date in respect of sentencing for the contempt. Mr. and Ms. Yates did not appear on April 18, 2007, and the motion judge fixed costs in their absence. He also rescheduled the sentencing hearing for May 2, 2007. On that date, Mr. and Ms. Yates appeared with counsel and sought to have the Costs Order set aside. The motion judge accepted the Yates’ explanation for failing to appear at the April 18th hearing and reconsidered the Costs Order. At para. 12 of the reasons released on June 26, 2007, he rejected the Yates’ argument that the quantum of costs was unreasonable saying:
[12] In my view, and I so find, the Bill of Costs for $91,620.92 is fair and reasonable considering all the circumstances. A great deal of work was required of the Bank’s counsel in the course of bringing the motion for contempt and the hearing thereof.
[12] It is clear that the motion judge reviewed the Bank’s Bill of Costs and was satisfied that the Bank was entitled to the amounts claimed on a full indemnity basis. We see no basis on which to interfere with the motion judge’s exercise of discretion.
DISPOSITION
[13] Accordingly, the appeal is dismissed, leave to appeal the costs order is granted but the costs appeal is dismissed, with costs of the appeal to the respondent fixed at $22,000, inclusive of disbursements and GST.
RELEASED: June 13, 2008 (“S.B.”)
“S. Borins J.A.”
“J.C. MacPherson J.A.”
“E.E. Gillese J.A.”