SUPERIOR COURT OF JUSTICE - ONTARIO
COURT FILE NO.: CV-13-5526-00
DATE: 2014 08 22
RE: ROYNAT INC. o/a ROYNAT LEASE FINANCE v. 1664092 ONTARIO INC.
BEFORE: EMERY J.
COUNSEL:
Wojtek Jaskiewicz, for the Applicant
Santosh K.M. Mishra, for the Respondent
Johan Gerret Grit (A.K.A. John Grit), not appearing
HEARD: August 13, 2014
REASONS FOR DECISION - SANCTIONS
[1] I made a finding of contempt against the respondents 1664092 Ontario Inc. (“1664092”) in my reasons for decision dated May 5, 2014. At paragraph 33 of those reasons, I gave 1664092 one last opportunity to purge that contempt, failing which I invited counsel for Roynat Inc. to arrange a phase two hearing through the trial coordinator to make submissions on sanctions, on notice to 1664092 and Mr. Grit.
[2] On August 13, 2014, Mr. Jaskiewicz for Roynat Inc. appeared before me and filed the affidavit of Shallon Garrafa sworn on August 12, 2014. That affidavit contained evidence that neither 1664092 or John Grit had contacted Roynat to disclose the location of the subject equipment as ordered.
[3] Mr. Mishra attended before the court on behalf of his client 1664092 and advised me that he was without instructions and would likely be moving in the near future to be removed as counsel of record. Mr. Mishra also informed the court that he had provided 1664092 and Mr. Grit with my decision of May 5, 2014 as well as written notice of this hearing for sanctions. He informed me that he had in fact spoken to Mr. Grit the previous day by telephone to inform him about this date.
[4] Mr. Grit did not appear before me despite knowing about this hearing today. His decision as the sole officer and director of 1664092 to act and remain in breach of the order of Justice MacKenzie dated January 10, 2014 and my subsequent order causes 1664092 to remain in continuous breach of those orders, thus requiring the hearing for sanctions.
[5] Counsel for Roynat relies upon the case of Mercedes Benz Financial v. John Kovacevic, 2009 9423 (ON SC), [2009] O.J. 888 for the test to apply on the imposition of sanctions for civil contempt, particularly in return of assets cases. In that decision, Justice D. M. Brown looked at factors such as the gravity of the conduct by the contemnor relative to breaching the court order, whether there are any mitigating factors, the possible rehabilitation of the contemnor, reparation to the party in whose favor the order was granted for the harm done, and whether there are aggravating factors for the court to consider.
[6] Subsequent to argument of the motion for sanctions, the recent decision of the Court of Appeal in Boily v. Carlton Condominium Corporation 145, 2014 ONCA 574 came to my attention. The court in Boily deals in part with the appropriate test to apply when the court considers sanctions for civil contempt. The appeal concerned the contempt order made against the directors of a condominium corporation. The Court of Appeal in Boily set aside that portion of the sanction in which the motions judge ordered the directors to pay the costs of the restoration of certain landscaping, and instead replaced it with a fine to be paid by each director to the condominium corporation. In Boily, the Court of Appeal set out the following factors relevant to a determination of an appropriate sentence for civil contempt:
- the proportionality of the sentence to the wrong-doing
- the presence of mitigating factors
- the presence of aggravating factors
- deterrence and denunciation
- the similarity of sentences in like circumstances
- the reasonableness of a fine or incarceration
[7] The sentencing factors set out in Boily essentially overlap the factors considered by Justice Brown in the Mercedes Benz case, even though they are characterized differently. The Court of Appeal added the factors of deterrence and denunciation, and the similarity of sentences in like circumstance for the court to consider.
[8] Mr. Jaskiewicz submits I need only consider the first factor relating to the gravity of the conduct as grounds for the remedy. This would also fall under the factor relating to the proportionality of the sentence to the wrong-doing under Boily. Mr. Grit has ignored the judgment of Justice MacKenzie dated January 10, 2014 even though he gave his consent to it on behalf of 1664092 upon negotiating the terms.
[9] Mr. Grit has now chosen to ignore my order of May 5, 2014 and to remain in breach even now. Whether he has retained the equipment for the purpose of running a business to make money without making payments under the lease, or he is merely stubborn, his conduct of refusing to surrender equipment owned by the applicant and his defiance of orders made by this court to give up this equipment deserves sanction.
[10] I have also considered the other factors set out in Boily and in Mercedes Benz to support this conclusion. Mr. Mishra is in the uncomfortable position of having to attend court without instructions through no fault of his own. He could therefore provide no evidence of mitigating factors. There is no evidence that 1664092 as the contemnor has or might be rehabilitated. In Mercedes Benz, the contemnor returned the car. In this case, the bulldozer’s location is only known to 1664092 and to Mr. Grit. For that reason, and for as long as their breach of orders of this court continues, there can be no mitigating factor to consider, no rehabilitation possible to the contemnor, and no reparation to Roynat Inc. for the harm done.
[11] I also find the fact that John Grit negotiated the terms of the varied judgment he has now caused 1664092 to breach to be an aggravating factor to consider on sentencing. On April 11, 2014, he again negotiated an extension for the payment of the judgment or return of the equipment and signed minutes of settlement. Now he has caused 1664092 to breach the order I made when I gave him an opportunity to make right the wrong he has caused. Mr. Grit has played for time on each occasion, and he has then fragrantly disregarded each agreement reached and order made.
[12] I have also considered the factors relating to deterrence and denunciation on the facts before me. I find that those factors weigh against 1664092 as the contemnor, and Mr. Grit as the sole officer, director and controlling mind of that corporation. A significant sanction against 1664092 in the form of a fine and a term of incarceration for Mr. Grit would seem the only way to enforce compliance with the orders breached, and to send a message to the general public that open defiance of court orders shall not be tolerated.
[13] I am mindful of Mr. Mishra’s submissions I’ve permitted him to make so that he could fulfill his ethical duty to his absentee client. He called my attention to the case of Chiang (and Trustee of) v. Chiang, 2009 ONCA 3, [2009] O.J. 41 where the Court of Appeal observed that custodial sentences for civil contempt are rare, and that ordinarily incarceration is a sanction of last resort. Mr. Mishra also points to a quote in the Mercedes Benz decision from a commentary published in 2001 by the Canadian Judicial Council titled “Some Guideline on the use of Contempt Powers” that supports a lenient approach when deciding a sentence for civil contempt. However, Justice Brown in the Mercedes Benz decision pointed out that sentences imposed by Ontario courts in recent years do not show a tendency for leniency where the contemnor has engaged in a lengthy display of disobedience and has not purged his contempt.
[14] The conduct of Mr. Grit and 1664092 have satisfied me that nothing short of a significant fine to 1664092 under Rule 60.11(5) and a period of incarceration for Mr. Grit as its officer, director and controlling mind under Rule 60.11(6) is applicable under all of the circumstances. Mr. Grit and the corporation have been given many opportunities to follow the orders of this court and to purge the contempt found, to no avail. This is a case of last resort.
[15] For the purposes of sentencing Mr. Grit and to observe the factor for the reasonableness of a fine or incarceration and the similarity of sentences in like circumstances, counsel for Roynat Inc. directed my attention to Bernardi v. Bernardi, [2009] O.J. 1574. In that case, the Court of Appeal reduced the sentence against the contemnor to fifteen days after finding that only part of the order breached was sufficiently clear to support a finding of contempt.
[16] I am also mindful of the direction of the Court of Appeal in Boily that the sentence imposed must be reasonable having regard to the circumstances.
[17] In view of this guidance, I make the following orders:
1664092 Ontario Inc. is hereby fined $10,000, payable by September 30, 2014 to Roynat Inc.
Johan Gerret Grit, also known as John Grit is sentenced to fifteen (15) days of incarceration in a Provincial Correctional Institution commencing at 4:00 p.m. on September 4, 2014 or from the date and time he is apprehended by any police service executing the following warrant of committal.
I hereby direct a warrant of committal in Form 60(L) be issued against Johan Gerret Grit, also known as John Grit in which the last paragraph shall read:
YOU ARE ORDERED TO ARREST Johan Gerret Grit, also known as John Grit, and to deliver him to a Provincial Correctional Institution to be detained for fifteen (15) days to commence on September 4, 2014 or from the date and time you apprehend him under this order, which is ever is later.
These Reasons for Decision – Sanction shall be attached to the warrant of committal.
This term of imprisonment will be set aside if before September 4, 2014 Johan Gerret Grit, also known as John Grit complies with paragraph 33 of my order dated May 5, 2014. If Johan Gerret Grit, also known as John Grit complies with that order during his incarceration, he is entitled to be released from custody before the fifteen (15) days has expired. Evidence of compliance shall be in a form of a further order of this court or an affidavit filed with the applicable Provincial Correctional Institution by the law firm of Pallett Valo LLP, lawyers for Roynat Inc. that the orders of Justice MacKenzie dated January 10, 2014 and my order dated May 5, 2014 have been satisfied.
If 1663092 Ontario Inc. remains in contempt of court after Johan Gerret Grit, also known as John Grit has served the sentence imposed above, the contempt shall be deemed as continuing and counsel for Roynat Inc. shall be at liberty to bring a motion on notice to 1664092 Ontario Inc. and Johan Gerret Grit, also known and John Grit for further sanctions.
[18] If Roynat Inc. seeks costs of both steps of the contempt process to date, I invite written submissions by September 4, 2014 and responding submissions from 1664092 Ontario Inc. by September 30, 2014, to be filed by fax to my Judicial Assistant, Sherry McHady at 905-456-4834. If no submissions are received by September 30, 2014, I shall consider that no costs are requested and the issue of costs shall be deemed to have been waived or resolved.
Emery J
DATE: August 22, 2014
COURT FILE NO.: CV-13-5526-00
DATE: 2014 08 22
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: ROYNAT INC. o/a ROYNAT LEASE FINANCE v. 1664092 ONTARIO INC.
BEFORE: EMERY J.
COUNSEL:
Wojtek Jaskiewicz, for the Applicant
Santosh K.M. Mishra, for the Respondent
Johan Gerret Grit (A.K.A. John Grit), not appearing
ENDORSEMENT
EMERY J.
DATE: August 22, 2014