SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: CV-09-385657
DATE: 20120629

RE: PEDRAM GHAEINIZADEH, ARMON GHAEINIZADEH, PAYAM GHAEINIZADEH, AZETA GHAEINIZADEH, MANOUCHEHR GHAEINIZADEH, ILINAZ NAELI, ILA NAELI, JACLYN ORSETTO, BAHIEH SHARIFI, ARASH SHARIFI, MASOUMEH ABBASIAN, MEHRAN YAZDANI, LERPON PAUL GREENSPOON, ARMONICO CORP. and 6740197 CANADA CORP., OPERATING AS DUX HOLDINGS, Plaintiffs

AND:

KU DE TA CAPITAL INC., 2199221 ONTARIO CORP., STEVE BERES, AZEEM SYED, SHAH SYED, SHAHZAD QUADRI and BASHIR SYED, Defendants

BEFORE: Whitaker J.

COUNSEL: Jennifer King and Paule Masic (Student-at-law) , for the plaintiffs, moving parties;
Bashir Syed , on his own behalf

HEARD: April 26, 2012

ENDORSEMENT

What This Case is About

[ 1 ] This is a motion by the plaintiffs for a finding of contempt against the defendant Bashir Syed (“Syed”).

[ 2 ] The plaintiffs also seek orders under Rule 60.18(6) to examine members of Syed’s family in aid of execution.

[ 3 ] The plaintiffs take the position that Syed is in contempt of five orders.

[ 4 ] The plaintiff was granted default judgment after the fourth order and a further judgment on the same day as the fifth order.

[ 5 ] Since judgment, Syed attended an examination in aid of execution on November 17, 2011.

[ 6 ] During his examination, Syed refused to answer some questions or to provide undertakings. Syed takes the position that his answers on examination are responsive. He suggests that his refusals are warranted and appropriate. Syed takes the position that he has complied with the order of Perell J. and is not in contempt.

[ 7 ] No motion has been brought to compel Syed to answer particular questions, make productions or to satisfy undertakings following refusals.

[ 8 ] For reasons which follow, I decline to find Syed in contempt or to order the examinations of his family members.

Facts

[ 9 ] For purposes of this motion, little is in dispute.

[ 10 ] In September 2004, the plaintiffs began investing in mortgages to be placed on properties owned by Syed. Over 2 million dollars were advanced to Syed for this purpose.

[ 11 ] Syed discontinued payments to the plaintiffs by May of 2009. Syed has since confirmed that he was using the defendants’ funds to maintain a “lavish” lifestyle.

[ 12 ] This action was brought in August 2009 when the plaintiffs learned that Syed had defrauded them of about 2 million dollars in what has been described as a “Ponzi scheme”.

[ 13 ] On September 1, 2009, the plaintiffs obtained an order from Code J. freezing assets and directing a detailed disclosure of funds and transactions. Syed was directed to provide a statutory declaration disclosing the whereabouts and movements of his assets.

[ 14 ] On the return of the motion on September 14, 2009, Code J. found that Syed was not in compliance with the September 1, 2009 order. Syed was given until September 28, 2009 to comply with the further orders.

[ 15 ] The plaintiffs brought a motion before Master Haberman on April 1, 2010 seeking orders with respect to refusals and undertakings. The motion was granted and Syed was directed to answer questions and satisfy outstanding undertakings.

[ 16 ] The plaintiffs brought a motion for contempt before Matlow J. Although the matter was heard, the court file was misplaced and the plaintiffs then abandoned the motion.

[ 17 ] On July 20, 2010 the plaintiffs brought a motion before Perell J. who granted the plaintiff’s request to continue the orders of Code J.

[ 18 ] On February 18, 2011, Spence J. struck the defence, noted the defendants in default and granted judgment.

[ 19 ] Further judgment was granted by Perell J. on March 22, 2011. Included in this judgment was an order entitling the plaintiffs to conduct an accounting and trace funds.

[ 20 ] On March 22, 2011, the plaintiffs brought a further second contempt motion before Perell J. The plaintiff’s sought an order seeking compliance with the orders of Code J. and Master Haberman.

[ 21 ] Perell J. declined to find Syed in contempt. Justice Perell granted an order that Syed attend a judgment debtor examination and in paragraph 4 of the Order, directed Syed to deliver information to the plaintiffs concerning 6 bank accounts and a list of his assets.

[ 22 ] Syed attended a debtor examination on November 17, 2011.

[ 23 ] At the examination, Syed refused to answer some questions put to him, refused to produce some material or to make undertakings.

[ 24 ] Syed takes the position that he has produced all he has that is relevant and in support of execution. He maintains that he has disclosed all information available to him concerning his finances and assets. He claims to have complied with the orders of Perell J. dated March 22, 2011.

[ 25 ] Syed maintains that his refusals are appropriate.

[ 26 ] The plaintiffs have not brought a motion seeking orders compelling Syed to answer particular questions and/or refusals.

The Issues

[ 27 ] The plaintiffs suggest that Syed should be found in contempt for three reasons;

(i) that he has failed to comply with a variety of orders made before judgment was granted;

(ii) that he has failed to comply with the order and judgment of Justice Perell dated March 22, 2011; and

(iii) that he has declined to answer some questions, provide information or make undertakings in his debtor examination.

[ 28 ] To reiterate, since judgment was granted, Syed has attended on November 17, 2011 for examination in aid of execution. During his examination he has refused to answer some questions and/or refused to produce some documents or make some undertakings. Syed and the plaintiffs disagree on the merits of his refusals and whether he should be obliged to answer further particular questions.

[ 29 ] Other than seeking a finding of contempt in the present motion, no motion has been brought to compel Syed to answer questions, produce material or to provide undertakings.

[ 30 ] The first question to be determined is whether Syed should be found in contempt where he has refused to answer questions or provide information or undertakings where there has been no order after judgment, compelling him to do so. Put another way, should a litigant after judgment be held in contempt for a failure to comply with an order made before judgment?

[ 31 ] The second question is whether Syed has complied with the orders made on March 22, 2011.

[ 32 ] The third question is whether Syed should be found in contempt for his answers to questions during his examination for execution.

[ 33 ] With the exception of the order and judgment of Perell J. on March 22, 2011, the orders relied upon by the plaintiffs’ for a finding of contempt pre-date judgment.

The Test for Contempt

[ 34 ] The plaintiffs suggest and I agree that the three pronged test from Hobbs v. Hobbs 2008 ONCA 598 , [2008] O.J. No. 3312 (C.A.) applies;

• the order must be clear and unambiguous;

• the disobedience must be deliberate and willful, and;

• proof is on the “beyond reasonable doubt” standard and any doubt is to be resolved in favour of the person alleged to have breached the order.

[ 35 ] In Mercedes-Benz Financial (DCFS Canada Corp.) v. Kovacevic (2009) 308 D.L.R. (4) 562 (S.C.J.), D.M. Brown J. describes the distinction in purpose between criminal and civil contempt at paragraph 7:

The choice of appropriate penalty for contempt must recognize the important distinction between civil and criminal contempt: the purpose of a sentence for criminal contempt is punishment, whereas the purpose of a sentence for civil contempt is coercive or persuasive, designed to enforce the rights of a private party.

[ 36 ] In the case here, the request for a finding of contempt is made with one exception, to enforce orders made before judgment and arising in the process of determining liability and damages. With the exception of the Perell order and judgment of March 22, 2011, it is not alleged that Syed has breached any other order made following judgment.

[ 37 ] This is quite unlike the case relied upon by the plaintiffs in Doobay v. Diamond [2011]O.J. No. 3419 (S.C.J.) . In Doobay , the motion for contempt was brought by judgment creditors to enforce an order made to answer particular direct and identified questions during a debtor examination under Rule 60.18.

[ 38 ] In the case before me, the orders made against Syed before judgment were with one exception, all relevant to the issue of liability or damages. None deal with issues arising in the execution of judgment.

[ 39 ] Certainly in a case of fraud, there may be an overlap between facts that go to liability and those which assist in execution. In my view however, orders made before judgment to assist in the determination of liability and damages do not have any further purpose in aid of execution after judgment and under Rule 60.18. Indeed it would be inappropriate for the court to make an order to assist in execution before judgment was granted. This could be construed as a pre-judging on the merits.

[ 40 ] After the point of judgment, there remain no issues of liability or damages to determine. Returning to the purpose behind civil contempt as described in Mercedes-Benz – that being the enforcement of rights as between private parties - I see no legitimate reason for the enforcement of orders made for these purposes after judgment. Indeed, why should public and private funds be spent pursuing information which goes to liability and damages after those questions are answered.

[ 41 ] With respect to the second issue which is the allegation that Syed remains in breach of paragraphs 4 and 6 of the March 22, 2011 order, Syed takes the position that he has produced all of the identified information. I am not prepared to find beyond a reasonable doubt that his apparent failure to provide this information is deliberate and willful.

[ 42 ] Finally, as to the third issue which is Syed’s failure to answer questions, provide information or undertakings in the context of his Rule 60.18 examination, there has yet to be an order obliging him to answer questions or provide information other than that information specified in paragraphs 4 and 6 of the order of Perell J. with respect to the six bank accounts. There is no allegation that Syed has breached any order made following March 22, 2011 and during the execution of judgment.

[ 43 ] To summarize, Syed is not in contempt of those orders made before judgment which compelled him to provide information and material relevant to liability and damages. Once judgment is granted, the inquiry into liability and damages is complete.

[ 44 ] With respect to the orders in paragraphs 4 and 6 of the order of March 22, 2011, I am not prepared to find beyond a reasonable doubt that Syed has deliberately and willfully breached the provisions of these orders. It may very well be that he has provided all of the information identified in the order that he is capable of providing.

[ 45 ] As to his failure to answer certain questions and provide undertakings, there is yet no order compelling him to answer these questions or determining the validity of such questions.

[ 46 ] In the circumstances, I decline to find Syed to be in contempt.

[ 47 ] I now turn to the plaintiff’s request to examine family members under Rule 60.18(6).

[ 48 ] As the plaintiffs have submitted at paragraph 70 of their factum, relatives of the judgment debtor should not be ordered examined unless the creditor has “exhausted all means available” ( CICB v. Sutton (1981), 1981 1886 (ON CA) , 34 O.R. (2d) 482 (C.A.)).

[ 49 ] In the present case the plaintiffs have not attempted to obtain an order compelling Syed to answer the outstanding questions. The plaintiffs have not exhausted all means to enforce their right to execution.

Outcome

[ 50 ] The motion is dismissed.

[ 51 ] The plaintiffs are unsuccessful and no costs were sought by Syed who appeared on his own behalf.

[ 52 ] No costs are ordered.

Whitaker J.

Date: June 29, 2012