ONTARIO

SUPERIOR COURT OF JUSTICE

Court File No.: 77202/05
Date: 2012-04-20

Between

Bruno Scenna, John Gregoris and Pre-Eng Contracting Ltd.
Plaintiffs

– and –

Maxwell Stanford, 1244903 Ontario Limited, Novacrete Construction Ltd., 985724 Ontario Ltd., and Constaff Construction Ltd.
Defendants

T. Kent, for the Plaintiffs
D. Preger, for the Defendant, Maxwell Stanford

Heard: April 19, 2012

Justice B.A. Glass

Introduction

[1] The parties participated in a trial during the fall of 2007. The trial determined that there was an agreement between the parties regarding the purchase and sale of shares in companies owned by the personal parties.

[2] The reasons for judgment were released on October 17, 2007. At paragraph 32 of the Reasons for Judgment, I noted: “The only events to be completed following the making of the agreement were the preparation of formal documents by Mr. Di Poce, the corporate solicitor, so that the property could be transferred, the purchase cash could be paid and the note back to Mr. Stanford could be prepared. I have had the benefit of listening to the parties. I find that their actions leading up to the February 28 th meeting and subsequently at the April 9 th meeting were those of persons who had made a contract and were following up with completing it until Mr. Stanford resiled from it.”

[3] The formal judgment was completed on November 9, 2007.

[4] Since the release of the Reasons for Judgment, costs have been argued and determined and the parties have conducted an appeal to the Ontario Court of Appeal.

[5] Now, years later, one party, Maxwell Stanford, is seeking directions from the court for the completion of the agreement of purchase and sale. Directions would include consideration of the tax structure, an adjustment for Mr. Stanford not being able to have a lifetime capital gains exemption, interest on cash payable from the judgment, the acceleration of some of the cash payable because the deal did not close, and minority protection with respect to a condominium unit. The plaintiffs oppose the court providing directions because the court is functus officio.

[6] However, the plaintiffs bring a motion of their own seeking a finding that the moving party, Mr. Stanford, is in contempt by refusing to complete the agreement that was found to exist in the trial judgment. They ask that Mr. Stanford be ordered to comply with the judgment I made in 2007. Further, the plaintiffs seek an order authorizing them to complete the agreement of purchase and sale to the extent of naming one of them to be authorized to act on behalf of Mr. Stanford for the share transfers. The plaintiffs ask that the court order that Mr. Stanford deliver the share certificates by May 10, 2012 pending the completion of the agreement of purchase and sale. The plaintiffs request that the court order that legal and accounting costs from the aborted closings as well as the motion for directions that was to be presented on November 21, 2011 be ordered against Mr. Stanford. Finally, the plaintiffs submit that costs on a substantial indemnity basis, inclusive of the travel costs of their counsel, be awarded for this motion.

The Issues Now to be Resolved

[7] Can this court make any order for directions for the sale of the shares referenced in the judgment of October 17, 2007?

[8] If the court does not have any authority to handle the Stanford motion, is there a foundation for finding that the defendant Maxwell Stanford is in contempt of the court judgment whereby the court can order a completion of the judgment for the transfer of shares as set out in the judgment?

[9] Further, how far can the court proceed for such a completion?

Analysis

[10] It seems to me that my comments in paragraph 32 of my Reasons for Judgment on October 17, 2007 clearly noted what the parties had to do in order to finish their business with each other.

[11] At paragraph 33 of my judgment on October 17, 2007, I stated: “In conclusion, there was an agreement upon which the parties might rely. As in the statement of claim the purchase price is $800,000. A cash payment of $560,000 is to be paid, a promissory note for $240,000 bearing interest at 3% per year for five years is to be provided, the condominium units will not be sold, and Mr. Stanford will transfer ownership of Constaff Construction Ltd to Mr. Scenna.”

[12] If they could agree on varying the mechanics of completing that purchase and sale of shares, they would have been at liberty to do so because they would have been doing so willingly. However, if they could not, they had a judgment that was straight forward in directions.

[13] There was no doubt that at the trial the court understood that Mr. Stanford had been told he was not in a position to claim the capital gains exemption that he still wants. He appears to have a desire to circumvent that problem to this day. In doing so, he has held off completing the transaction.

[14] With respect to the issue of a court being functus officio, this case is very different from Doucet-Boudreau v. Nova Scotia (Department of Education), 2003 SCC 62 , 2003 CarswellNS 375 where the trial judge specifically set a schedule for a continuation of involvement with him for the purpose of implementing his decision. With Mssrs. Scenna, Gregoris and Stanford, the judgment given in 2007 did not contemplate any further involvement by the trial judge once it was determined that there was an agreement between the parties.

[15] I do not have authority to return to the case as if there were still outstanding issues to be determined. I am functus officio. This is not a situation whereby the parties are conducting what is often referred to as housekeeping matters. The judgment reasons clearly stated the quantum of consideration in cash and promissory note for the simple transfer of shares. There is no decision to be made now to make the deal work.

[16] As matters stand now, the action is completed. There is a judgment that the successful plaintiffs are entitled to enforce. Mr. Stanford is not completing the obligations flowing from the judgment.

[17] The Maxwell motion is dismissed.

Is Mr. Stanford in contempt of the judgment released on November 9, 2007? And if he is, what sanction should the court consider?

[18] A finding of contempt requires a determination that the person has deliberately acted contrary to the judgment as established beyond a reasonable doubt. In other words, if a person acts to a lesser degree than proof beyond a reasonable doubt, there cannot be a finding of contempt. The subject of a contempt application must have a chance to make a full answer and to cross-examine witnesses and call evidence. Rule 60.11 requires personal service of a contempt application unless the court orders otherwise.

[19] There is no issue about personal service here. Service was effected upon counsel for Mr. Stanford by way of a cross-motion after Mr. Stanford brought his motion for directions. There is no doubt that Mr. Stanford was aware of the proceedings. Therefore, service upon his counsel is approved. Neither side asked to call viva voce evidence or to cross-examine any person who executed an affidavit.

[20] With the material before me, this now is a four and a half year delay in completing the requirements of the judgment. Mr. Stanford appealed unsuccessfully. That appears not to have been satisfactory for Mr. Stanford. He has continued to try to get a better deal. By doing so, Mr. Stanford has frustrated the completion of the agreement of purchase and sale.

[21] I am satisfied that he has acted deliberately in a manner that is outside the boundaries of the judgment I signed on November 9, 2007. That is established beyond a reasonable doubt.

[22] There will be a finding that Mr. Stanford is in contempt of the judgment.

[23] There will be an order that he is found in contempt. The sanction for this contempt will be that Mr. Stanford is ordered to complete the share transfer. Should he fail to do so by May 10, 2012, I have set out below what will happen in order to complete the agreement of purchase and sale.

[24] With respect to the plaintiffs’ cross motion for orders to complete the transfer of shares, there will be orders to the effect sought by these parties.

[25] Mr. Stanford is ordered to comply with the judgment and complete the transfer of shares. He has not been prepared to deliver the shares. There is a foundation for the court to order that Mr. Scenna be appointed to act as Mr. Stanford’s attorney to execute the documents to complete the share transfers. Mr. Stanford is ordered to deliver the share certificates for the companies to Mssrs. Pascale Di Poce on or before May 10, 2012 to be held in escrow pending completion of the agreement and then released according the completion of the transaction.

Costs

[26] Costs of the trial and the appeal are ordered to be set off against the funds to be paid to Mr. Stanford for the completion of the transaction.

[27] There was to be a motion heard on November 21, 2011 for the matters heard today; however, the plaintiffs were not advised that the motion was not proceeding. Counsel for the plaintiffs attended. Mr. Kent had been in Toronto on business the previous week. He remained in Ontario waiting to argue this motion on November 21 st rather than returning to British Columbia. I am satisfied that counsel for Mr. Stanford did not apprise the plaintiffs’ counsel that he had not filed the materials so that attendance by Mr. Kent from British Columbia was a waste of time. Tardiness in advising Mr. Kent was not excusable. Costs for that lost time are to be compensated to the plaintiffs as part of costs thrown away.

[28] Mr. Preger acknowledges that costs for the motion date of November 21, 2011 should be awarded in favour of the plaintiffs with respect to Mr. Kent attending for a non-existent proceeding. Basically, there is recognition that Mr. Kent was not kept in the loop sufficiently.

[29] I determine that costs for Mr. Kent for November 21, 2011 will be fixed at $4,000 plus HST.

[30] With respect to the issue of costs thrown away for the costs of the corporate lawyer and accounting costs for the aborted closing, Mr. Preger for Mr. Stanford argued that the costs thrown away for the aborted sale with the corporate lawyer and accounting are not really thrown away. When a sale is completed, the corporate lawyer, Mr. Pascale will use the same documents probably with a change to the cover page and a change of date.

[31] With respect to the issue of costs thrown away for the corporate legal and accounting costs for the aborted completion of the transaction in 2011, I accept the suggestion that the work and materials prepared are not thrown away and will be used for the final completion of the agreement of purchase and sale. Therefore, there will not be a costs award for those items.

[32] Costs for the instant motion are to be awarded to the plaintiffs. There has not been any settlement offer to consider. Submissions on costs will be made with counsel by way of conference call with a court reporter recording submissions. Counsel will co-ordinate a time for the conference call with the trial co-ordinator at Oshawa.

Justice B.A. Glass

Released: April 20, 2012