COURT OF APPEAL FOR ONTARIO

CITATION: Doobay v. Diamond, 2012 ONCA 580

DATE: 20120907

DOCKET: C54141

Lang, Epstein and Hoy JJ.A.

BETWEEN

Danny Doobay and

Richbuilt Development Inc.

Plaintiffs (Respondents)

and

Anthony Diamond and

Diamond + Diamond Merchant Banking Group

Defendant (Appellant)

David M. Midanik, for the appellant

Simon Bieber and Christopher Scotchmer, for the respondents

Heard: April 3, 2012

On appeal from the Order of Justice Beth A. Allen of the Superior Court of Justice dated July 25, 2011, with reasons reported at 2011 ONSC 4457.

Epstein J.A.:

A. OVERVIEW

[1] Anthony Diamond appeals from an order finding him in contempt of court, sentencing him to 42 days in jail, and fining him $40,000. The finding was based on his refusal to answer questions he was asked during examinations in aid of the respondents’ attempts to execute on a 2007 default judgment they obtained against the appellant.

[2] The appellant challenges the finding of contempt on several grounds. He maintains that by the time the motion for contempt was heard he no longer had any obligations to the respondents as the matter had been settled or at least he had good reason to believe it had been settled. The appellant submits that the motion judge erred by refusing his request for an adjournment for the purpose of calling viva voce evidence to this effect. The appellant also argues that the motion judge erred by failing to specify which questions were inadequately answered. He further contends that the motion judge erred by penalizing him for conduct for which he had already been penalized.

[3] If his appeal from the finding of contempt is unsuccessful, the appellant appeals his sentence on the basis that the motion judge erred by imposing an unreasonable penalty.

[4] For the reasons that follow, I would dismiss the appeal in its entirety.

B. Facts

[5] In October 2007, the respondents obtained default judgment against the appellant in the amount of $854,924.21. In his May 27, 2008, examination in aid of execution he refused to answer any questions. On August 22, 2008, Master Sproat ordered the appellant to re-attend the examination and answer all proper questions. Further to this order, the appellant was examined on December 15, 2008, but again refused to answer a substantial number of the required questions.

[6] On July 24, 2009, on consent, Master Sproat ordered the appellant to provide written answers to all but one of the outstanding questions asked during the December 15, 2008 examination by September 30, 2009 (406 questions in total). The order further required the appellant to attend an examination on October 23, 2009, for the purpose of answering any follow-up questions arising from his written answers.

[7] While the appellant missed the September 30 deadline, he did purport to provide written answers to all 406 questions. However, the respondents were not content with the answers and brought a contempt motion.

[8] After a three-day hearing, Spence J. concluded, in reasons released on June 18, 2010, that the answers provided to all but 70 questions were “largely unresponsive” and “must be considered to be a deliberate attempt to obfuscate the issue before the court for the purpose of avoiding complying with the Order.” As the appellant had failed to meet the terms of Master Sproat’s orders and had shown “flagrant disregard for the Court process”, Justice Spence held him to be in contempt of court, sentenced him to 21 days’ imprisonment and imposed a fine of $20,000.

[9] After an unsuccessful attempt to appeal the decision of Spence J. to this court, the appellant served his sentence in January 2011. Then, on the basis of the appellant’s continued disobedience of the court orders, the respondents brought another contempt motion. At the hearing of this motion, scheduled to take place before Hainey J. on May 18, 2011, the appellant claimed that he had retained new counsel who could not attend on that occasion and undertook to purge his contempt if the matter were adjourned. The adjournment, opposed by the respondents, was granted with the condition that the appellant provide responsive written answers, within 30 days of May 18, 2011.

[10] Again, the appellant purported to deliver responses to the questions in issue and again the respondents remained dissatisfied. They pursued their motion for contempt. The appellant brought a cross-motion for an order staying the contempt motion as an abuse of process, or alternatively, an adjournment in order to give him the opportunity to call viva voce evidence.

C. Motion judge’s reasons

[11] At the outset of the hearing, the motion judge dismissed the appellant’s cross-motion in which he sought an adjournment. The appellant argued that the testimony of witnesses he proposed to call would supplement two emails that were before the motion judge that evidenced a settlement or at least supported his honest belief that a settlement had been reached.

[12] The motion judge’s refusal to grant the adjournment was based on her finding that the record contained no evidence that supported the appellant’s position that the matter had settled or that he had reason to believe that a settlement had been reached. The proposed testimony would therefore not have assisted in the determination of whether the appellant remained in contempt of court.

[13] The motion judge also rejected the appellant’s argument that the respondents were using the contempt motions to force him into an improvident settlement and thus were abusing the process of the court. The appellant chose not to pursue this issue on appeal.

[14] The motion judge then turned to the main motion for contempt. She reviewed the answers the appellant had provided to the respondents’ counsel under cover of letter dated June 13, 2011, the respondents’ reply of June 28, 2011 indicating that, again, the answers were not responsive, and the appellant’s letter of July 5, 2011, providing further answers. The motion judge then carefully categorized the outstanding questions that remained in dispute and examined the answers to the questions.

[15] At the end of this detailed analysis, the motion judge concluded that the answers demonstrated “the same evasiveness and unwillingness to comply with the Court Orders” that the appellant had displayed in previous court appearances and that he was “obviously still playing tricks and games to avoid the Court’s authority”. She held that “there is no question that [the appellant] deliberately and wilfully disobeyed the Court Orders for him to answer the questions responsively” and therefore found that he had failed to purge his contempt, and remained in contempt of court.

[16] After reviewing the court’s jurisdiction to sanction contempt as set out in rule 60.11 and related authorities, the motion judge specifically noted the fact that the appellant’s disrespect of the court’s authority had not been remedied by the previous sanction, saying, at para. 46: “[i]t is clear there has been active defiance on [the appellant’s] part. He has engaged in repeated unrepentant acts of contempt. Serving a previous period of jail time has not influenced his attitude and conduct.”

[17] After noting the respondents’ position that the appellant be incarcerated for three months and fined a further $50,000, the motion judge sentenced him to a term of incarceration of 42 days and imposed an additional fine of $40,000 to be paid within 30 days.

D. ISSUES

[18] The appellant has raised three principal grounds of appeal:

1. In dismissing the cross-motion, the motion judge erred in refusing to grant the requested adjournment, thereby preventing him from adducing evidence concerning the alleged settlement;

2. The motion judge erred by failing to specify which answers were inadequate and by penalizing for the same conduct that formed the foundation of the previous finding of contempt and accompanying penalty; and

3. The sentence imposed was unreasonable.

E. ANALYSIS

(1) The Cross-Motion for an Adjournment

[19] The appellant argues that the motion judge’s refusal to grant the adjournment request deprived him of a fair hearing. He claims that the evidence available from his proposed witnesses would have augmented the evidence the motion judge had before her in the form of the two emails – evidence that would have supported his claim that the matter had been settled or that he at least had reasonable grounds to believe that it had been settled. I disagree.

[20] First, as previously noted, Hainey J. adjourned the motion set for May 18, 2011 to enable the appellant to arrange for his witnesses to attend and testify. In granting the adjournment, Hainey J. made the hearing of the motion peremptory to the appellant. It was clear to the appellant that if he wished to call witnesses, those witnesses had to be ready to testify before the motion judge on July 13, 2011. He failed to ensure their attendance. This alone would be sufficient to dispose of this issue. However, even if the hearing on July 13 was not peremptory to the appellant, I would still not give effect to this ground of appeal.

[21] The appellant’s argument concerning the denied adjournment turns on whether the determination of the motion for contempt required the resolution of any material facts in dispute. If so, a trial of an issue would have been necessary. In the absence of any disputed material fact, a motion for civil contempt may proceed summarily: R. v. B.E.S.T. Plating Shoppe Ltd. and Siapas (1987), 1987 4056 (ON CA), 59 O.R. (2d) 145 (C.A.), R. v. Jetco Manufacturing Ltd. and Alexander (1987), 1987 4436 (ON CA), 57 O.R. (2d) 776 (C.A.).

[22] The only issue the appellant raised as being material and contentious was whether the parties had settled or at least whether he genuinely believed that they had settled their differences relating to the unsatisfied judgement.

[23] In my view, the motion judge was correct in finding there to be no air of reality to the appellant’s allegations of a settlement – actual or perceived. The two emails themselves belie the appellant’s argument as they do not demonstrate a settlement: they contain nothing more than a settlement proposal and its rejection.

[24] The only evidence that a settlement had been reached was the appellant’s bald allegation in his affidavit sworn May 13, 2011, where, at para. 39 he says: “I met with [the respondents’ representative] on March 27, 2011, to settle the civil claim of Doobay, and a settlement was reached.”

[25] The problem is that this assertion does not stand up to scrutiny when considered in the light of the appellant’s own conduct. He claims that, as far as he is concerned, a settlement was reached on March 27, 2011. However, in letters dated June 13, 2011 and July 5, 2011, the appellant, by providing further written answers to the outstanding questions, conducted himself in a manner contrary to the existence of a settlement or his reasonable belief that the matter had been settled. I would also note that the appellant appeared before Hainey J. on May 18, 2011, five days after swearing his affidavit of May 13. The appellant did not raise the issue of settlement and obtained an adjournment on an undertaking to provide responsive answers within 30 days. All of the appellant’s conduct during this period is inconsistent with an honest belief that the matter had settled.

[26] Against this background, I see no error in the motion judge’s exercise of her discretion to refuse the appellant’s request for an adjournment to call viva voce evidence.

[27] I would therefore not give effect to this ground of appeal.

(2) The motion for contempt

(a) Specificity

[28] The appellant, relying on Cotroni v. Quebec Police Commission, 1977 193 (SCC), [1978] 1 S.C.R. 1048, argues that the motion judge erred by not reviewing each of his responses in order to specifically set out which answers were unsatisfactory and thereby formed the foundation for the finding of contempt.

[29] In Cotroni, the Supreme Court held that “no one should be found guilty of contempt of court unless a specific charge has been brought against him.” According to the Supreme Court:

An accused person who is sentenced to a long term in prison for evasive answers regarded as amounting to a refusal to testify is entitled to purge himself of his contempt by providing answers that are not evasive. In order to be able to do this he must know quite clearly which questions require better answers.

[30] I would not give effect to this ground of appeal as it is clear that the appellant was well-aware of the specifics of his default.

[31] In June 2011, the appellant attempted again to address the unanswered questions. Counsel for the respondents advised that he still considered the answers to be unsatisfactory. In a letter dated June 24, 2011, David McGregor, a lawyer working for the appellant, again wrote to the respondents’ lawyers asking for clarification on which answers in particular were non-responsive. On June 28, the respondents’ lawyer replied, listing every question and answer that remained problematic.

[32] The motion judge did not review each and every answer. Rather, she identified a long list of answers as inadequate, such as repeated replies of “fishing expedition”.

[33] The appellant knew that answers such as this were unacceptable just as he was well aware of which questions Master Sproat ordered him to answer and which questions had not been satisfactorily answered. This is not a case where a contemnor was deprived of the opportunity to purge his contempt because of lack of specificity.

[34] Accordingly, I would not give effect to this ground of appeal.

(b) Double-jeopardy

[35] The appellant submits that he had already been sentenced for contempt by Spence J. and cannot be punished for the same contempt twice. He relies on the holding of the Alberta Court of Appeal in Re Braun, 2006 ABCA 23, 262 D.L.R. (4^th) 611, that if contempt is not purged, “continued disobedience is neither an aggravating factor nor a fresh transgression” (at para. 27).

[36] However, in Chiang (Trustee of) v. Chiang, 2009 ONCA 3, 93 O.R. (3d) 483, this court stated that it could not endorse the reasoning in Braun. First, as explained in para. 44, it was at odds with the coercive purpose of civil contempt:

To permit only one penal sanction for the ongoing breach of an order deprives the court of the ability to impose measured, but incremental, sanctions to obtain compliance with that order. In other words, if the court can impose only one period of incarceration for a civil contempt, then it cannot address, in any meaningful way, a contemnor’s continuing defiance.

Second, the Ontario Rules of Civil Procedure provide more flexibility in sentencing than Alberta’s Rules of Court, Alta. Reg. 390/1968.

[37] While the reasoning expressed in Chiang was obiter, I would endorse it and apply it to this case. The coercive tool of civil contempt must have teeth. For that reason, I reject this ground of appeal.

(3) The Penalty

[38] For almost five years the appellant has been frustrating the respondents’ attempts to enforce the judgment they have against him – depriving them of their lawful rights and needlessly costing them time and money. He has also shown profound disrespect for the court.

[39] Spence J. tried to send a clear message to the appellant that conduct of this nature would not be tolerated. Unfortunately, the message was not strong enough to impress upon the appellant the importance of obeying court orders. I see no reason to interfere with the motion judge’s decision to strengthen the message by doubling the sanction imposed for lack of compliance.

(4) The Structure of the Contempt Hearing

[40] A point not raised by the parties merits comment. It involves the procedure the motion judge followed. While the procedure to be followed in contempt hearings is in the discretion of the motion judge, they are generally bifurcated - there is a liability phase and a penalty phase. This is to allow the contemnor an opportunity to purge his or her contempt: College of Optometrists of Ontario v. SHS Optical Ltd. (c.o.b. Great Glasses), 2008 ONCA 685, 241 O.A.C. 225, at para. 73. The contemnor’s efforts to purge the contempt during the period between conviction and penalty are a relevant consideration in the determination of the appropriate penalty: Great Glasses, at para. 79.

[41] Here, the motion judge determined liability and penalty at the same time. As a result, prior to the determination of punishment, the appellant had no further opportunity to purge or at least attempt to purge the contempt found by the motion judge.

[42] As Watt J.A. noted in Great Glasses, in some circumstances a consolidated hearing may cause unfairness – it may not only deprive the contemnor of the opportunity to purge his or her contempt but also expose the contemnor to a situation where evidence relevant to penalty may affect the determination of liability.

[43] Here, as noted, there was no challenge on this point. Nor, in my view would one have been successful given that the contempt itself was effectively not in issue and that the history of the matter evidenced Mr. Diamond's intention to continue his contemptuous conduct.

A. disposition

[44] For these reasons, I would dismiss the appeal with costs payable by the appellant to the respondents that I would fix in the amount agreed upon by counsel of $8,900, inclusive of disbursements and applicable taxes.

Released:

“SEL” “Gloria J. Epstein J.A.”

“SEP 07 2012” “I agree Susan E. Lang J.A.”

“I agree Alexandra Hoy J.A.”