COURT FILE AND PARTIES

COURT FILE NO.: FS-11-372987
DATE: 20120305

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Sherry Lynne Sutherland-Yoest Applicant – and – David Sutherland-Yoest Respondent

D. MacKenzie, for the Applicant

S. Grant and M. Edmiston, for the Respondent

HEARD: February 16, 2012.

KITELEY j.

[ 1 ] In reasons for decision released January 30, 2012 [2012ONSC663] I found Mr. Sutherland-Yoest in contempt. I ordered him to attend before me on February 9 th , 2012 for purposes of purging his contempt. He did not attend on February 9 th . On that occasion I made an order requiring him to attend before me on February 16 th , 2012. He did attend and gave evidence and I heard submissions as to what remedy I should impose for his contempt. I reserved the decision but made an endorsement in which I rescinded the arrest warrant dated February 9, 2012 and I indicated that I would not issue a committal warrant. While waiting for the endorsement with reasons, I ordered Mr. Sutherland-Yoest to pay $67000 by February 24, 2012 to bring the mortgage into good standing.

Affidavit sworn February 8, 2012

[ 2 ] As indicated in my endorsement dated February 9 th , Mr. Sutherland-Yoest informed Mr. Sadvari on the eve of the hearing that he would not be attending. Mr. Sadvari filed an affidavit of his client in which he said that he knew an order had been made on October 20 th and again on October 27 th , that he knew he was not to communicate with his wife except through counsel, that he had communicated with her contrary to the order and that in telephoning her a couple of times and sending her SMS text messages a few times, he was violating the order. He apologized to the court and to his wife and asked for forgiveness. He said he was sorry for the distress he had caused her. He made a commitment to not do that again. He also apologized for his remarks with respect to Mr. Niman.

[ 3 ] In that affidavit he apologized for his absence in court on February 9 th . He said it was not because of any disrespect for the court or the process or disregard of my order requiring him to attend. He said it was

Only because I simply do not have the funds at the moment [to] book even the cheapest tickets home. Nor have I any funds to pay our mortgage, as ordered. I am unable to borrow any more money at the moment.

[ 4 ] Mr. Sutherland-Yoest said he had maxed out his credit cards. He attached a copy of an American Express statement and a statement of an account from RBC. He also attached a letter from RBC dated January 5 th , 2012 which indicated “various delinquencies” on his accounts and informed him that the joint accounts and lines of credit had been put on a “deposit only restraint”. Mr. Sutherland-Yoest said he had spent approximately $700000 on business development expenses for which he expected to be reimbursed when his new venture is up and running. He attached a schedule that indicated the private flights listed between January 2011 and September 14, 2011 had cost over $236000.

[ 5 ] Mr. Sutherland-Yoest said he had signed a contract with respect to the new venture and he expected to receive an immediate payment of several hundred thousand dollars when the contract was signed by other parties. When he received that payment, he said he would distribute it to his creditors, the largest being the Royal Bank that holds the mortgage, his lawyer and the accountant needed to assist in his financial affairs for this proceedings,

And of course to book a plane ticket back to Toronto to appear in Court as this Court may direct.

[ 6 ] Mr. Sutherland-Yoest said he had been hopeful that money would have been available by that point but that was not within his control. He remained hopeful that it would be paid “within a couple weeks at the outside”. Knowing that Mr. Sadvari was going away and returning March 6, 2012, he asked that I set a date after his return. His affidavit concluded as follows:

I understand that I must make this process my priority and am trying to do so but have also been trying to secure my family’s financial future, to find a legal and practical way to avoid selling both our properties, as I know how much we both love them. Although I respect Sherry’s decision to end our marriage, I want to be more generous than the law requires, and very much want to discuss settlement whenever she and her advisors feel they know enough to be ready to do so, all in the hope of bringing this nightmare to an end.

[ 7 ] Mr. Niman brought to my attention that on February 1 st – two days after I released written reasons for decision in which I found him in contempt for having contacted his wife contrary to the order and in which I directed that the cottage would be sold - Mr. Sutherland-Yoest had sent a text message to his daughter as follows:

Tell your mother that the cottage will not be sold. Also that despite Harry’s efforts I am not going to jail. Why she wants me to go to jail is beyond me. Someone needs to work and I don’t think either of you has the capacity to generate money better than me. I will fix Harry, he is hurting Sherry and that hurts me. Fuck him, and I will!!!!!

[ 8 ] Needless to say, given what appeared to be a further contempt by contacting his wife indirectly through his daughter and by refusing to comply with the order for sale of the cottage, the request for a prolonged adjournment was not granted.

Evidence at the hearing on February 16, 2012

[ 9 ] Mr. Sutherland-Yoest identified the orders dated October 20 and October 27 th . He said he had not continued to pay the mortgage on the matrimonial home. He read paragraphs 6 and 7 of his wife’s affidavit sworn January 23 rd and he admitted to having left the messages. He said he was emotionally disturbed by what he believed was Mr. Niman’s style and that he and his lawyer had been trying to meet with his wife and Mr. Niman for months to explain his situation but that his wife was under Mr. Niman’s spell and he thought she was not getting the right advice. He added that he understood that she has the right to choose her counsel and he “deeply apologized”. He said that he has been involved in the “regulatory process and the justice system” for 20 years and that his approach is “linear” but he said that the messages referred to in paragraphs 6 and 7 were “non linear thinking”. He said he knew he was wrong in his comments. He added that he had put his wife and his daughter ahead of everything and he apologized to the court, to Mr. Niman, to his daughter and to his wife. He said it would not happen again.

[10] He was taken to paragraph 8 – 11 of his affidavit sworn January 25, 2012 and he then described the progress of the venture he had been working on since he left his employment in March 2011. Because there might be some confidentiality issues, I will not review his evidence. Suffice it to say that Thomas Durkin is his corporate counsel. His office is in New Jersey. Mr. Sutherland-Yoest has worked with Mr. Durkin on prior occasions. Subject to the regulatory approvals that were underway, he was expecting the venture to come together as soon as the week of February 20 th . When that happened, he expected to receive nearly $1 million which would reimburse him or allow him to pay for legal expenses (corporate and personal including retainer for the business valuator), travel, consulting and other expenses.

[11] Mr. Sutherland-Yoest was asked how he lives. He said that when he is in California, he stays at the Peninsula Hotel in Beverley Hills. His black and platinum American Express cards had been cut off because he had not paid them. On Friday February 10 th he was told he would be evicted by 1:00 p.m. unless he paid his bill. He had a friend satisfy the hotel bill and that same friend arranged for his flight to come to Toronto for court.

[12] Mr. Sutherland-Yoest was asked what were the implications if I imposed a period of jail as a result of his contemptuous conduct. He described in detail that I will not repeat how it will be a significant obstacle to the joint venture because it would likely preclude him from obtaining regulatory clearance. If that happened, the joint venture could not proceed. Later he said that he did not think that an order for his arrest was in his family’s best interests because it would impair his ability to raise the money for the joint venture.

[13] As for the text message he sent his daughter on February 1 st , he agreed that paragraph 23 of my January 30 reasons for decision was clear, that he breached it and he accepted responsibility for having been “out of bounds” by having communication with his wife and daughter in that fashion. He said he was “very deeply sorry for not dealing with the court order in a respectful way” and he added that it is not in his nature to deal with the judicial system in that fashion. He said that there was no excuse and that the text message had been a “bad bad decision driven by frustration”. He said that it was “very wrong” to have sent it and he repeated that he knew his wife was entitled to choose her own lawyer. He said he had no intention to harm his wife or Mr. Niman. He said that he had wanted to reconcile and he is coming to realize that that is not going to happen. He insisted that he will obey court orders “to the letter of the law”.

[14] As for the reference to the cottage in that February 1 st text message, he said that while he knew his wife had a plan to sell the cottage, he did not want it sold. He said it was meant to be a heritage property and a legacy for their daughter and her children. He realized that there was a court order for sale and that he won’t object to the listing and had agreed to a listing agent.

[15] Mr. Sutherland-Yoest said that in 2010 and 2011 he has had 12 surgeries on his hands. The procedures were done by his friend in California. They caused considerable pain and he developed pain medication management issues. He did not use his health as an excuse for his contemptuous conduct.

[16] In conclusion he said that I probably don’t think he is credible by not complying with court orders, that normally he is credible and what he wanted to do was to look after his family.

[17] In cross-examination, he said that the person who had on February 10 th paid the bill at the Peninsula Hotel for “10’s of thousands of dollars” and had arranged for his flight to Toronto was his physician who had been involved with his hand surgeries and is one of the investors in the imminent joint venture. On February 16 th , Mr. Sutherland-Yoest was accompanied by Mr. Durkin who had used his own credit card to book a hotel. He insisted that he could not have obtained even the cheapest airfare in order to attend the February 9 th hearing. He was shown a statement for a credit card at a financial institution that had credit available. He was asked why he had not used that and he said he does not have the card in his possession and had forgotten that he had it. He was shown a statement from another financial institution with considerable credit and again he said he did not carry it or use it and the two cards he did carry were maxed out.

[18] Ms. MacKenzie asked him how he paid his assistant and he said he doesn’t pay her. He said she has a high level of awareness about his venture and she has an expectation that she will be paid.

[19] Mr. Sutherland-Yoest confirmed that he had initiated the separation in April, 2011. He was unable to confirm whether any disclosure had been provided between April and June, 2011. He was not familiar with a letter dated August 10, 2011 to Mr. Sadvari in which Mr. Niman confirmed that no disclosure had been received by that date.

[20] Ms. MacKenzie asked him what efforts he had made to make arrangements to attend the February 9 th hearing and he said he had no money.

[21] Mr. Sutherland-Yoest was shown a statement from his American Express card for the period ending January 12, 2012. He agreed that he had stayed at the St. Regis hotel from December 17 to December 23rd, 2011 and that a charge had been incurred in the amount of $34552.94. He said that he had spent significant time in New York in November, December and January working on the joint venture. He agreed that his credit card had been used as follows:

December 19 $40200 to purchase artwork
December 22 various purchases at high end retail stores in New York totaling approximately $1400
December 23 $1595.62 to purchase flowers in Beverly Hills
December 24 $17150 to purchase art in New York
December 26 approximately $300 in a spa in Beverly Hills.

[22] He also agreed that all of those expenditures were at a time when the mortgage on the matrimonial home was overdue.

[23] Ms. MacKenzie suggested that since the separation, he had not paid support for his wife. He insisted that he had paid almost $1 million for enhancements to the cottage and to the matrimonial home.

[24] Mr. Sutherland-Yoest was asked if he understood how difficult it is for his wife that he has not paid support. He said that the last he knew, her brokerage account had between $400,000 and $500,000 in it. He agreed that it was his obligation to pay all the outstanding bills and that those bills were all “big stress points” that would be satisfied if he was allowed to carry on with the joint venture. He was asked if he had made any mortgage payments since October 27 th and he doubted he had because there was no money in the account and accordingly the automatic withdrawals could not have occurred. He said that his assistant had called RBC and been told that the mortgage arrears as of February 14 th were $67000.

[25] Ms. MacKenzie asked if he had read his wife’s affidavit sworn December 16 th . He said he wasn’t sure he read it and that sometimes he gets documents and sometimes his assistant reads the document to him. He said he had no knowledge of the letter dated December 14, 2011 attached as Exhibit C to his wife’s affidavit sworn December 16 th .

[26] In closing, Ms. MacKenzie suggested that he didn’t care about what court orders say because they don’t “hit his radar”. Mr. Sutherland-Yoest said he did care and that was why he was there that day.

[27] In re-examination, Mr. Sutherland-Yoest said that the principal of the mortgage on the matrimonial home was $400000 and that he would bring the mortgage into good standing by February 24 th .

Positions taken by counsel

[28] Mr. Grant took the position that his client had shown up and was contrite and intends to comply and asked that I give him one more chance. He suggested that I require him to bring the mortgage into good standing by February 24 th but that any penalty should be imposed only if there is a further breach or contemptuous conduct. Alternatively, he asked that if I imposed a sanction, I ought to direct that it was not enforceable until a breach occurred. He observed that the court now has Mr. Sutherland-Yoest’s “full and undivided attention” and that incarceration would be the worst thing possible for the family. He said that his client expects to pay costs on a full indemnity basis.

[29] Mr. Durkin had been in court at the beginning of the hearing but Mr. Grant had excused him in case he called him as a witness. In the presence of Mr. Durkin I asked whether he would comply with an order requiring disclosure and Mr. Grant said he thought I could rely on compliance subject only to confidentiality concerns.

[30] Ms. MacKenzie did not agree that Mr. Sutherland-Yoest had shown contrition in view of his most recent breach on February 1 st and his failure to attend on February 9 th .

Findings

[31] In reasons for decision dated January 30 th , I found Mr. Sutherland-Yoest in contempt for having communicated directly with his wife. Within two days, he did it again. In a text message to his daughter but meant for his wife, in a threatening manner he insisted that the cottage would not be sold and he said he would not go to jail. He now says he realizes he was wrong in the earlier instances and again on February 1 st and he has apologized to his wife, his daughter, Mr. Niman and to the court. The threshold issue is whether I accept his acknowledgement of responsibility, his contrition, and his insistence that there will be no repetition.

[32] The non-payment of the mortgage is problematic. He does not make payments to the Bank. Instead, the Bank has a pre-authorized direction to withdraw funds. Because there has been no money in the account from which the mortgage was collected, no payments have been made. He made no efforts to ensure money was in that account. As indicated in paragraph 35 of my earlier reasons, in his affidavit sworn January 10 th , he said that he had spoken with the Bank and no steps would be taken to enforce arrears. He had not read the letter dated December 14 th , 2011 attached to his wife’s affidavit. Furthermore, the January 5 th , 2012 letter that he produced on February 16 th , 2012 makes it clear that RBC is not so forbearing as he said in his January 10 th affidavit and has insisted that the payments on the “Joint Products” be kept up to date. He did not offer to bring the mortgage into good standing until his re-examination.

[33] At the outset of his evidence, Mr. Sutherland-Yoest was still fairly aggressive about his view on Mr. Niman although he seemed to reduce that aggression as the afternoon wore on. At the end of the day, I am left with the strong inference that the main reason why he turned up in court was because of the impact on his joint venture if he were unable to obtain financing as a result of a warrant of committal. Intellectually he now understands that he was in contempt of the non-communication order. But he still harbours the view that he had wanted to explore reconciliation and that Mr. Niman had been a barrier to resolution.

[34] It is apparent that this is all about priorities that Mr. Sutherland-Yoest establishes. While spending $57000 on art purchases in December, he continued to let the mortgage fall into arrears. Although he could not find the resources to come to court on February 9 th , when he needed to avoid eviction from the Peninsula Hotel on February 10 th , he found a way to do it. My order that he attend on February 9 th was not important enough to provoke compliance but the warrant for his arrest and the prospect of a committal warrant did, although not because he wanted to comply but because if he did not comply, he risked his business venture.

[35] Notwithstanding the contents of paragraphs 31 to 34, with some hesitation, I accept that Mr. Sutherland-Yoest knows his obligations pursuant to the orders of October 20 th and 27 th , knows that the communications on January 18 th and on February 1 st were in breach of those orders, accepts responsibility for having breached the orders, has apologized, and will not breach any orders in the future.

[36] Mr. Sutherland-Yoest does not read the documents that have been filed on behalf of his wife in these proceedings. His assistant in Mississauga reads him portions of some of what is generated. Understandably he does not like to carry them on his travels and risk loss. However, it is unacceptable that he does not ensure that he is fully informed on a day to day basis as to what is occurring in the proceedings.

[37] Mr. Grant accepted that Mr. Sutherland-Yoest would be required to pay substantial indemnity costs. Ms. MacKenzie produced two bills of costs. The first covered the period December 2, 2011 to January 26 th , 2012 and was in the amount of $42749.60. The second covered the period January 30 th , 2012 to February 16 th was in the amount of $13081.82 but did not include the hearing which lasted from about 2:30 to approximately 5:15 p.m. I did not have time that day to hear submissions. Mr. Grant said counsel on behalf of Mr. Sutherland-Yoest would try to reach an agreement with counsel for Ms. Sutherland-Yoest as to the amount.

[38] In the presence of Mr. Durkin, Mr. Sutherland-Yoest agreed that if I made an order that documents and information be made available by Mr. Durkin (over whom I have no control), that, subject to confidentiality issues, he would ensure compliance by Mr. Durkin.

[39] According to Rule 31, if a person is found in contempt, the court may order imprisonment, payment of a fine, payment of an amount to a party as a penalty or other sanctions. There is wide discretion to make an order that responds to the circumstances. The various orders listed below are intended to bring home to Mr. Sutherland-Yoest that a repetition of any of the conduct seen to date will not be tolerated. I am assuming that Mr. Sutherland-Yoest has complied with the other directions contained in the reasons for decision released January 30 th and that he brought the mortgage into good standing by February 24 th .

ORDER TO GO AS FOLLOWS:

[40] I find that Mr. Sutherland-Yoest has purged his contempt as indicated in paragraph 27 of my reasons for decision dated January 30 th , 2012.

[41] By March 14 th , 2012, Mr. Sutherland-Yoest will ensure that a written apology signed by him is delivered to Mr. Niman. Email, text message, photocopy or fax copy will not constitute a written apology.

[42] By March 19 th , 2012, Mr. Sutherland-Yoest will have read these reasons for decision and initialed each page and his counsel will ensure that the initialed copy is filed in the endorsements section of the court file.

[43] By March 19 th , 2012 and on or about the 19 th of each month for 6 months, Mr. Sutherland-Yoest will ensure that Mr. Durkin provides to counsel for the wife the documents and information necessary to keep the wife and her counsel informed as to the status of the joint venture. If counsel are unable to agree as to what documents and information are to be provided on a monthly basis, then I will make that determination. Before providing the first installment, counsel for the wife and the wife shall sign the confidentiality agreement required by Mr. Durkin.

[44] If counsel are unable to agree by March 19 th , 2012 as to the amount of costs on a substantial indemnity basis to be paid and the terms of payment, then by March 26 th , 2012, counsel for Mr. Sutherland-Yoest shall make submissions in writing not exceeding three pages. Submissions will not be required by counsel on behalf of the wife since the bills of costs have already been provided.

[45] Mr. Sutherland-Yoest shall ensure that the mortgage is kept in good standing.

[46] If Mr. Sutherland-Yoest fails to comply with any prior order or with this order, a motion to compel compliance or other relief may be brought, before me if I am available. If I find any further contemptuous conduct, I will impose a sanction that takes into consideration the seriousness of the events to this date as well as the seriousness of the subsequent conduct.

Kiteley J.

Released: March 5, 2012

COURT FILE NO .: FS-11-372987
DATE : 20120305

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Sherry Lynne Sutherland-Yoest AND David Sutherland-Yoest

REASONS FOR JUDGMENT

Kiteley J.

Released: March 5, 2012