ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Vincenzo Pronesti
Applicant
- and -
1309395 Ontario Ltd., 1794566 Ontario Ltd., 1794565 Ontario Ltd., Shakeel Balroop, Satt Balroop and Sham Balroop also known as Shamshad Balroop
Respondents
Oscar Strawczynski,
for the applicant
Kevin D. Toyne for the respondents Shakeel Balroop, Satt Balroop and Shamshad Balroop
Shakeel Balroop, in person, for the respondent 1309395 Ontario Inc.
HEARD: February 11, 2015
F.L. Myers J.
REASONS FOR decision
The Motion
[1] For oral reasons delivered on December 15, 2014 supplemented by written reasons delivered December 18, 2014, now reported at 2014 ONSC 7303, the court found the three Balroop respondents to be in contempt of court. On February 11, 2015, the parties attended to argue sentencing. These are my Reasons for Decision on sentence for the contemnors.
Background
[2] By order dated October 24, 2014, I granted the applicant a Mareva injunction freezing the respondents’ assets and requiring them to make full disclosure of their assets to the applicant. At the time, the applicant alleged that he was the mortgagee of 1309395 Ontario Ltd. After a tax sale of the mortgaged land was conducted by the municipality of Quinte West, approximately $247,000 was paid into court in Belleville. The money was to be held pending payment to the appropriate parties in accordance with the priorities established by law. The respondent 1309395, the mortgage debtor and owner of the land, apparently moved before the court in Belleville for payment out of the funds to itself. It gave notice to the municipality, but not to the applicant as mortgagee. The respondent 1309395 did not mention to the court that the applicant was mortgagee or that, as mortgagee, it had a superior claim to the funds in court.
[3] Shakeel Balroop is the owner of 1309395. He and his parents, Satt Balroop and Shamshad Balroop, own and manage a number of corporations, many of which also have relationships with the applicant. The evidence shows that they routinely move funds among themselves and their corporations.
[4] The Balroops were held in contempt prior to the return of the main application. The basis of the contempt finding was that they had failed to comply with the Mareva injunction and subsequent orders of the court requiring them to make disclosure of their assets and of the whereabouts of the $247,000.
Subsequent Events
[5] On holding the Balroops liable for contempt on December 15, 2014, as noted above, I gave brief oral reasons. My handwritten Endorsement that day was as follows:
For oral reasons dictated and written reasons to be delivered the respondents are held in contempt of the court’s orders dated Oct. 24, Nov. 17 and Dec. 8, 2014. The respondents now have an opportunity to purge their contempt as I explained to them. Sentencing hearing scheduled for Monday, December 22, 2014 at 10:00 o’clock a.m. at 361 University Avenue Courthouse. [Emphasis added.]
[6] The date scheduled for the sentencing hearing was moved on consent by Endorsement dated December 17, 2014. That Endorsement includes the following:
[2] This delay provides a further opportunity for the respondents to purge their contempt i.e. to comply with court’s orders in the context of the upcoming hearings. All of the orders made in this matter remain in full force and are to be obeyed in the interim. The Balroops should pay particular attention to the minimum compliance terms that were ordered on consent of all parties on December 8, 2014. Those terms tell the Balroops exactly what is required of them. Compliance with all court orders and making full disclosure will like [sic] be very relevant issues on the return of the main hearing and the respondents’ motion on 29th of this month and at the sentencing hearing. [Emphasis in original.]
[7] My written Reasons for holding the Balroops in contempt are dated December 18, 2014. In the final paragraph of those Reasons, I wrote:
The hearing of the main application and the Balroops’ motion to set aside the Mareva order is returnable December 29, 2014. If they wish to purge their contempt prior to sentencing, complying with all of the orders that have been made and doing so prior to the hearings on the 29th will be a very important demonstration of their sincerity. [Emphasis added.]
[8] On December 29, 2014, Matheson J. heard the main application. The respondents attempted to justify bringing their motion to take the $247,000 out of court without notice to the applicant on the basis that the applicant had agreed to waive his interest in the property. Justice Matheson held that there was insufficient evidence of a binding agreement to amount to a defence to the mortgage debt and security. She held 1309395 liable for unjust enrichment for taking the $247,000 from court and depriving the applicant of the funds without juridical reason. She also held that the funds were impressed with a constructive trust. Considering the limited available evidence tracing the trust funds, Matheson J. held the respondent 1794566 liable for $206,009, the respondent 1794565 liable for $177,175, and the respondent Shamshad Balroop liable for $40,000.
[9] Justice Matheson left for trial the issue of fraud alleged by the applicant, as well as the rest of the tracing exercise given that the Balroops had yet to make sufficient disclosure to allow for a full understanding of the path along which they moved the subject funds among themselves and their various corporations. Justice Matheson extended the Mareva injunction for a further 30 days to allow the parties to begin to get procedures sorted out for trial. She adjourned the respondents’ motion to set aside the Mareva injunction. In addition, she noted the following at the end of her oral reasons:
I have taken a few minutes to explain to the respondents what Justice Myers I expect would have meant when he said purge your contempt, and they indicate they now understand that. It does not require a motion. It requires their compliance with the order that they have been found not to have complied with in the contempt proceedings. [Emphasis added.]
[10] The applicant’s motion to extend the Mareva injunction came on before McEwen J. who extended the injunction until it could be brought before me at the time of the sentencing for contempt. During the sentencing hearing, Mr. Toyne represented the Balroops. Shakeel Balroop acted for 1309395 pursuant to leave granted by Matheson J. at the hearing of the main application on December 29, 2014. Shakeel Balroop consented to an extension of the Mareva injunction until trial. His parents were present in court and consented as well. Accordingly, I endorsed that extension at the time.
Contempt
[11] In my Reasons dated December 18, 2014, I specified the various failures of the Balroops to comply with both the Mareva injunction and subsequent orders made in an effort to enforce compliance with the Mareva injunction. In effect, the Balroops failed to make the disclosure of their assets and the movements of the subject $247,000 as required. Shamshad and Shakeel Balroop overtly frustrated efforts to cross-examine them at court ordered examinations. What follows is a brief review of two items from those Reasons that are of particular significance for the purposes of sentencing: (a) Shamshad Balroop’s defiance of the Mareva injunction in light of my Endorsement dated November 17, 2014; and (b) the consent order dated December 8, 2014. I will address each in turn.
[12] On November 3, 2014, Lederman J. continued the Mareva injunction. He set a partial schedule for the hearing of the main application and the respondents’ proposed motion to set aside the Mareva injunction. He ordered the respondents to attend for cross-examination. They had not yet done so despite the provisions of paras. 3 and 4 of the Mareva injunction itself.
[13] On November 14, 2014, Shamshad Balroop attended for cross-examination as ordered by Lederman J. She refused to be cross-examined because she did not have a lawyer. She also said that the respondents were planning to attend Civil Practice Court on November 17, 2014 to schedule a motion to set aside the Mareva injunction so she assumed all proceedings under the Mareva injunction were stayed.
[14] At Civil Practice Court on November 17, 2014, I disabused Shamshad Balroop and Shakeel Balroop of any notion that the proceedings were stayed by their proposed motion. I scheduled the return of the respondents’ motion to set aside the Mareva injunction on the same date as the return of the main application. In my Endorsement I wrote:
I explained to the respondents who appeared before me today that there is a subsisting order of the court that must be complied with unless or until it is set aside.
14 The orders of the court are to be complied with. Accordingly, the respondents are to deliver to counsel for the applicant the financial information required by paragraph 3 of the Mareva injunction dated October 24, 2014 by 4:00 PM EST on Tuesday, November 18, 2014. Shamshad Balroop is to re-attend for cross-examination at 2:00 PM EST on Wednesday, November 19, 2014 at the same location as the aborted examination last week. The cross-examination is under paragraph 4 of Mareva injunction. Shamshad Balroop is required to answer all questions relevant in any way to any matter referred to in paragraph 3 of that order. [Emphasis added.]
[15] Despite the clear and express provisions of the November 17, 2014 Endorsement requiring Shamshad Balroop to attend for cross-examination and answer all relevant questions, upon attending on November 19, 2014, Shamshad Balroop refused to be cross-examined again. The following exchange occurred:
82 Q: Is it your position that you do not need to comply with Justice Myers’ order of October 24?
A: I have--
83 Q: Until the motion to determine whether or not it should be set aside has been heard?
A: Yes.
84 Q: That is your position?
A: That is our position
[16] When asked if she had provided a statement of her assets as required by para. 3 of the Mareva order, she responded:
109 A: Until my motion is heard and until I’ve sought legal counsel then I will know what to do.
[17] What then followed was a series of denials of any knowledge or recollection concerning transactions that were demonstrated by the bank statements that had been obtained by the applicant’s counsel. Yet during the contempt proceedings, Shamshad Balroop gave viva voce evidence concerning many of those very same transactions. When asked when she obtained this information, she responded “I always knew”.
[18] It is clear beyond any reasonable doubt that Shamshad Balroop understood her obligation to comply with the orders of the court - both the Mareva injunction and the Endorsement dated November 17, 2014 - and she deliberately refused to do so. This is not a case of merely intending to do an act that happens to breach an order. Shamshad Balroop intended to defy and frustrate the orders both in refusing to be examined and in carrying out that refusal by feigning a lack of memory that she subsequently admitted was untrue.
[19] The second event deserving of specific mention is the consent order dated December 8, 2014. For a brief period in late November and early December, 2014, the Balroops were represented by counsel who was not Mr. Toyne. Money was released from the Mareva injunction to allow the Balroops to retain counsel and they did so. On November 28, 2014, at the first return of the contempt proceeding, counsel apologized for the Balroops and expressed their undertaking to comply with the Mareva injunction. On December 8, 2014, the matter came back before the court, at which time the parties agreed upon a further consent adjournment on terms. The terms were fashioned by the parties through negotiation. They were not fashioned by the court. These were terms that the Balroops confirmed through their counsel and agreed were acceptable. The parties’ agreement was enforced by the court in an order.
[20] The effect of the consent order was to give clarity to the precise obligations on the Balroops so that they could know exactly how to comply with the outstanding orders as they were promising to do. My Endorsement that day included the following, “The respondents’ disclosure has yet to satisfy the terms as ordered. They must meet the words and spirit of the Mareva order by disclosing fully and completely exactly where the money received by 1309395 Ontario Ltd. was moved, spent or otherwise disbursed.” (Emphasis added).
[21] Paragraph 2 of the December 8, 2014 consent order provides as follows:
- THIS COURT ORDERS that, by 4:00 p.m. on Wednesday, December 10, 2014 (the “Compliance Date”), the Respondents provide an accounting for:
(a) $177,175.00 received by 1794565 Ontario Ltd. from 179566 Ontario Ltd. by way of bank draft dated February 13, 2014;
(b) $26,825.00 paid by 1794566 Ontario Ltd. to Cambridge Mercantile Corp. by way of bank draft dated December 10, 2014;
(c) $3,000.00 paid by 1794566 Ontario Ltd. to Re Max Quinte Ltd. by way of bank draft dated December 10, 2014;
(d) $26,825.00 paid by Sham Balroop by way of bank draft dated December 6, 2013 from TD Bank account 6436625;
(e) $1,500.00 paid by Sham Balroop by way of cheque 00001-0100290689 drawn on TD Bank account 1580-6436625;
(f) Each transaction in the TD Bank statements for Account 1580-6436625 from December 2, 2013 to March 14, 2014;
(g) All sums paid by Sham Balroop to QuinteEssential Credit Union from TD Account 1580-6436625;
(h) All sums advanced under the personal loan from QuinteEssential Credit Union for which payments were made from TD Account 1580-6436625;
and that, at a minimum, compliant accounts shall include:
(a) Disclosure of the disposition of the subject funds, including identifying any financial institution at which the funds or draft was deposited or redeemed;
(b) Copies of statements for any account to which the funds were deposited from the date of deposit to date;
(c) Copies of statements for any account to which funds traceable to the subject funds were subsequently transferred or deposited from the date of such transfer or deposit to date; and
(d) For each withdrawal, transfer or other disbursement from such accounts, identifying the recipient of the funds and the purpose for the transaction and producing any documents relating to or giving rise to the transaction (such as, but not limited to contracts, invoices, promissory notes or receipts); or, where the Respondents state that they have no records in their possession, power or control, evidence of written requests enclosing a copy of this Order directed to the counterparty to the transaction requesting production to the Applicant’s counsel of all documents relating to or giving rise to the transaction in question.
[22] As can be seen from the above, the parties agreed on five specific transactions and two broader classes of transactions between Shamshad Balroop and QuintEssential Credit Union that required comprehensive disclosure. Disclosure was to include bank statements showing where the money went, including subsequent transactions, and was to identify the recipient of the funds, any documents underlying the transactions or, if the respondents had none, evidence of the respondents’ requests to counterparties for production of all documents concerning the transaction(s). This was the parties’ agreement and the order of the court.
[23] However, at the time of the contempt hearing on December 15, 2014, as recited in the written Reasons for holding the respondents in contempt, there was little, if any, compliance with the consent order. Similarly, despite the last paragraph of those Reasons, and my Endorsements of December 15 and December 17, 2014, the Balroops did not make further let alone complete disclosure before the return of the main application before Matheson J. on December 29, 2014. As noted above, this limited the ability of Matheson J. to grant a full tracing remedy. Even if the respondents’ apparent confusion of how to “purge” their contempt was in fact a problem for them (in light of my multiple endorsements explaining what they were required to do) Matheson J. explained the issue yet again and was as clear as a bell that the Balroops were required to comply with the orders of the court that they had failed to fulfill to that time. They still have not done so.
The Sentencing Hearing
[24] Shakeel Balroop delivered an affidavit dated January 18, 2015 for the Mareva injunction extension motion before McEwen J. and an affidavit dated February 10, 2015 for the sentencing hearing. In the latter affidavit, Shakeel Balroop provides his evidence concerning the Balroops’ purported compliance with six listed orders. He treats attendances like those where he and his mother refused to answer questions as if they amounted to compliance. Similarly with the respondents’ affidavits of December 2, 2014 that I have already held to have been insufficient in my Endorsement dated December 8, 2014. He reiterates in a lengthy chart a number of movements of funds but provides no new back-up documents and no clarity as to where the funds ultimately ended. With respect to the consent order of December 8, 2014, he points to a document dated December 10, 2014 that purports to breakdown the spending of the $177,175 identified in para. 2(a) of that order. He then provides a bank statement from QuintEssential Credit Union purporting to evidence those transactions. The statement does indeed show movements of money. But the respondents provide no evidence showing where the money went or what the nature of each transaction was, no transaction documents, nor any correspondence to counterparties asking for such documentation.
[25] Rather, than constituting compliance, these actions demonstrate a continuing pattern. The Balroops remove one layer of the onion at a time, exposing some information, but providing little or no context or clarity on the nature or significance of that information. The same can be said for the rest of the purported disclosures under subheadings of para. 2 of the consent order dated December 8, 2014.
[26] Mr. Strawczynski is correct that the respondents’ production of a bank statement for the $177,175 raises as many questions as it answers. So too does the new receipt produced at the sentencing hearing purportedly from Mr. Miracle. It does not appear to be consistent with the one provided previously and discussed in my Reasons dated December 18, 2014.
[27] At the outset of his submissions on sentencing, I asked Mr. Toyne if he could point to evidence to establish where the $247,000 in trust funds had gone. He quite fairly responded that he could not identify what the Balroops had done with the money based on the evidence before the court. But, he argued, the Balroops had taken steps to try to comply with the outstanding orders. And it is based on those steps that Mr. Toyne focused his sentencing submissions.
Principles of Sentencing for Civil Contempt
[28] Contempt of court may be either civil or criminal. To be classified as criminal, the contempt must generally involve some aspect of public defiance or public deprecation of the court’s authority: Chiang (Trustee of) v. Chiang, 2009 ONCA 3 at para. 9, 93 O.R. (3d) 483; United Nurses of Alberta v. Alberta (Attorney General), 1992 CanLII 99 (SCC), [1992] 1 S.C.R. 901 at p. 933, 71 C.C.C. (3d) 225. As the Court of Appeal in Chaing, supra, noted at para. 10, “the distinction between civil and criminal contempt is not always clear cut… even in purely private litigation, the breach of a court order and the resulting sanction for contempt invariably reflect public disrespect for the authority of the court.”
[29] In this case, the contempt of court arises in a civil dispute and relates principally to efforts by the applicant to find money that the court has now ruled to be held in trust for him. Having said that, the contempt here is not simply missing a date for the delivery of a pleading or a single, explicable breach of a minor procedural order. Rather, it consists of repeated breaches and a continuing refusal to comply with a Mareva injunction and orders made in aid of that order.
[30] In Sabourin and Sun Group of Companies v. Laiken, 2013 ONCA 530, 367 DLR (4th) 415, the Court of Appeal described a Mareva injunction as follows, “The basic premise of a Mareva order is that the defendant is a rogue bent on flouting the process of the court. That is said to justify the exceptional and drastic measure of freezing the defendant’s assets before trial and before judgment.”
[31] A Mareva order is indeed an exceptional and drastic remedy. It represents the civil law’s efforts to protect against a rogue flouting the civil processes of the court. A civil remedy that cannot be enforced provides scant justice to the applicant. The civil law must enforce its Mareva orders if justice is to be served in cases involving people whose consciences do not bind them to comply with the law. Thus, while this case is one of civil contempt, it falls to the more serious end of the continuum.
[32] The power to punish for contempt is essential to the rule of law and the proper administration of justice. In United Nurses, supra, at p. 931, McLachlin J. (as she then was) observed that:
The rule of law is at the heart of our society; without it there can be neither peace, nor order nor good government. The rule of law is directly dependent on the ability of the courts to enforce their process and maintain their dignity and respect. To maintain their process and respect, courts since the 12th century have exercised the power to punish for contempt of court.
[33] Because the matter is one of civil contempt rather than criminal contempt, the law is not concerned only with punishment for the affront to the court. Rather, sentencing for civil contempt also takes into account the desirability and necessity of ensuring compliance with the court’s orders. Some punishment is required for deterrence and to express condemnation, but compelling compliance with the underlying order is required to acheive civil justice.
[34] In College of Optometrists of Ontario v. SHS Optical Ltd., 2008 ONCA 685 at para. 106, 93 O.R. (3d) 139, Watt J.A. noted that “[t]he underlying purpose of contempt orders is to compel obedience and punish disobedience.” However, as mentioned above, when sentencing a civil contemnor, the court should generally place greater emphasis on coercion and compelling compliance than on punishment per se: Chiang, supra, at para. 11.
[35] Inasmuch as strictly civil contempt still “bears the imprint of the criminal law”, the applicable principles of sentencing are also those in the criminal law: Chiang, supra, at paras. 11, 86-87; Astley v. Verdun, 2013 ONSC 6734, aff’d 2014 ONCA 668. At first instance in Astley, at para. 16, Goldstein J. provided a very helpful summary of these principles:
• A sentence must be proportionate to the gravity of the offence and the degree of responsibility of the offender: Criminal Code, s. 718.1; Chiang, para. 86; Mercedes-Benz Financial v. Kovacevic, 2009 CanLII 9423 (ON SC), [2009] O.J. No. 888, 308 D.L.R. (4th) 562, 74 C.P.C. (6th) 326 (Sup.Ct.) at para. 12.
• A sentence should be increased or reduced to account for aggravating or mitigating factors surrounding the contempt or the contemnor: Criminal Code, s. 718.2(a); Chiang, para. 24; Sussex Group v. Fangeat, [2003] O.J. No. 3348, 42 C.P.C. (5th) 274 (Sup.Ct.) at para. 67.
• A sentence should be similar to sentences imposed on similar contemnors for similar contempts committed in similar circumstances: Criminal Code, s. 718.2(b); Chiang, para. 24.
• Sentences should denounce unlawful conduct, promote a sense of responsibility in the contemnor, and deter the contemnor and others from defying court orders: Criminal Code, s. 718; Sussex Group at para. 67; Chiang at para. 24.
• The Court should consider sanctions other than jail: Criminal Code, s. 718(2) (d) and (e); Sussex Group v. Sylvester, 2002 CanLII 27188 (ON SC), [2002] O.J. No. 4350, 62 O.R. (3d) 123 (Sup.Ct.) at paras. 80-82.
The Balroops’ Submissions
[36] Mr. Toyne argues that in this case the applicant had other avenues available to him to try to find the money rather than seeking a contempt order. He says that the applicant could have sought more production and cross-examination orders. He could have sought orders for third party production. He could have sought an Anton Pillar order. Contempt, Mr. Toyne argues, should have been the last remedy brought rather than the first.
[37] This argument ignores the drastic nature of a Mareva injunction and the rare and exceptional circumstances in which such an order is made. On October 24, 2014, the court held that there was both a strong prima facie case of fraud and grounds for finding a risk of dissipation. The Mareva injunction itself ordered third party production (effectively a form of Norwich Pharmacal order), document production by the respondents, and cross-examination. Shamdshad and Shakeel Balroop have each been cross-examined three times out of court. Satt Balroop once. All then gave viva voce testimony in court at the contempt hearing. Moreover, multiple attendances were held in court and multiple efforts were made to encourage the Balroops to comply. The applicant cannot be criticized for bringing a contempt proceeding in these circumstances, especially when the court has already concluded beyond a reasonable doubt that each of the Balroops is in contempt of court.
[38] Mr. Toyne also argues, rightly in my view, that jail should be regarded as a last resort in civil contempt sentencing. It should be reserved for the most serious contempt or where there is no choice but to jail in order to coerce compliance or to express the principles of deterrence and denunciation. He urges that a small fine, in the order of $7,500, ought to be sufficient in this case.
[39] By way of mitigating factors, Mr. Toyne points to the fact that this is the first offence for each of the contemnors. That is true. He also argues that the respondents have not been proven to have had “contumacious intent” i.e. the intention not only to do the acts alleged but the deliberate purpose to breach the court’s orders. Contrary to this submission, for the reasons noted above, I am convinced beyond a reasonable doubt that Shamshad Balroop did indeed have such intention. Its presence is an aggravating factor. I am not satisfied that the applicant has proven that Satt Balroop had such intention. Satt Balroop does not live with Shamshad Balroop at present. While their finances remain intertwined, it was clear to me that it is Shamshad Balroop who was running interference for, and supporting her son Shakeel in his effort to recoup what he can for his company. While I have no doubt that Shakeel Balroop hopes to benefit from the frustration of the plaintiff’s efforts to enforce the law, I am not satisfied that he would not have fulfilled the court’s orders but for his mother’s involvement. Throughout the course of this matter, she has stood in front of him as a shield, blocking Mr. Strawczynski’s efforts, and provided access to her accounts to move money.
[40] Mr. Toyne refers as well to the Balroops’ willingness to consent to orders and to try to make disclosure as additional mitigating factors. It is true that the Balroops have done more than nothing. Some months and tens of thousands of dollars later, the applicant is closer to understanding where the trust funds went and if any of the money remains in the respondents’ control. They have peeled back a few layers of the onion when absolutely required. They have not completely flouted the court’s process. Neither, however, have they fulfilled the court’s orders or shown a bona fide effort to do so with any sense of purpose or urgency. At its highest, this submission amounts to a claim that this is not the worst possible case. That is true. The facts in Chaing, supra, for example, were worse. But that fact is neutral; it neither mitigates nor aggravates in my view.
[41] Another mitigating factor proffered by Mr. Toyne is the Balroops’ apology issued through their lawyer on November 28, 2014. That was a hollow statement to be sure. Their December 2, 2014 affidavits were plainly lacking. They fired their lawyer rather than fulfil the order to which they consented through him.
[42] Another apology was made at the sentencing hearing. After completing his submissions, Mr. Toyne invited Shakeel Balroop to address the court. The transcript records the following:
SHAKEEL BALROOP: Good afternoon, Your Honour. I just wanted to say that the whole proceedings, it was not our intent for us to go to this extent. We didn’t plan on being in this position. We just ask that you take what our counsel had said and allow us to move on to the next part of this action in terms of satisfying the judgment they received on the 29th. So I sincerely apologize on behalf of myself, as well as my parents, we apologize for extending the Court’s time to having these content [current?] proceedings.
THE COURT: Anything else, sir?
SHAKEEL BALROOP: I’m saying I just apologize.
THE COURT: Thank you.
[43] As best as I can tell, Shakeel Balroop apologized for extending the proceedings. He said nothing about the Balroops’ refusal to comply with court orders to disclose their assets. He asks to just “move on” with satisfying the judgment but makes no mention of the respondents’ continued failure to purge their contempt (i.e. to comply with the court’s orders) despite repeated opportunities and entreaties to do so. This second apology, without content and without compliance, is therefore equally hollow.
[44] The Balroops let opportunities for mitigation escape their grasps. In that regard, I need mention the tears shed by Shamshad Balroop at the end of her testimony at the contempt hearing on December 15, 2014. Shamshad Balroop cried, she said, because her family was being oppressed by these court proceedings and were being labelled wrongdoers when they have never had so much as a parking ticket in their lives. Her pain might have rung truer if accompanied by any remorse at all for her ongoing refusals to abide by the court’s orders in this proceeding. She sees no wrongdoing in her actions and feels put upon for being called to account. That is not remorse.
Sentence Details
[45] In Chaing, supra, at para. 90, the Court of Appeal held:
Custodial sentences for civil contempt are rare. Lengthy custodial sentence are even rarer. Canadian courts have tended to punish contempt of court leniently. Ordinarily the mere conviction for contempt together with a modest fine suffices to obtain compliance and protect the court's authority. Ordinarily incarceration is a sanction of last resort: see Robert J. Sharpe, Injunctions and Specific Performance, 3d. ed. (Aurora: Canada Law Book, 2000) at para. 6.120.
[46] In Mercedes Benz Financial, supra, D.M. Brown J. (as he then was) considered the Court of Appeal’s comments in Chiang, supra, and stated:
- In that case the Court of Appeal also noted that Canadian courts have tended to punish contempt of court leniently. I suspect this observation was based on the commentary contained in the document published in May, 2001 by the Canadian Judicial Council entitled, "Some Guidelines on the Use of Contempt Powers", where, at page 40, the following statements are found:
In Canada punishment for contempt has been quite moderate, reflecting the courts' usual view that a conviction for contempt and a modest fine is usually sufficient to assert the courts' authority, to protect their dignity or to ensure compliance. Often these sentences are imposed after the contemnor has apologized and purged his or her contempt which substantially mitigates any punishment that might otherwise be imposed.
Notwithstanding these comments by the Canadian Judicial Council, sentences imposed in recent years by Ontario courts for civil contempt of court do not display a tendency towards leniency, especially in cases where the contemnor has engaged in a lengthy course of disobedience and has not purged his contempt… any differences in the resulting range of sentences should flow, in my opinion, from the application of the principle of proportionality, not from some notion that courts should treat instances of civil contempt leniently. [Emphasis added.]
[47] Justice Brown also noted that a fine is not an appropriate penalty where there is little likelihood that the contemnor will pay it. It is obvious that no fine will be paid here or, if it is, it will be paid with funds that would otherwise be used to satisfy the applicant’s judgment.
[48] The principle objectives of coercing compliance, deterrence, and denunciation must be balanced on the facts of each individual case in order to arrive at a just and appropriate sentence. The sentence should include steps to coerce compliance with the court’s orders and express denunciation and deterrence. The sentence should be proportional to the seriousness of the offence. Accordingly, the following sentences represent first and light steps balancing all of these objectives. The parties will return to court on March 23, 2015 to establish that they have fully complied with the following orders:
[49] Satt Balroop please rise. Satt Balroop has not purged his contempt despite repeated opportunities for him to do so including his entry into of a consent order with which he has yet to comply. He works for a living although he has yet to earn any commissions in his position.
[50] Therefore, Satt Balroop will be subject to a conditional sentence order. In addition to the usual statutory terms, including reporting to a conditional sentence supervisor, the conditional sentence order will include the following terms:
a. Satt Balroop shall comply with the disclosure obligations contained in the Mareva injunction dated October 24, 2014 and with para. 2 of the December 8, 2014 consent order on or before March 16, 2015. He will attend for cross-examination on his assets and the assets of the respondents, including the matters set to in para. 2 of the December 8, 2014 order, on a date to be scheduled by the counsel to the applicant during the week of March 16, 2015;
b. Satt Balroop will complete 50 hours of community service;
c. Satt Balroop will be jointly and severally liable with Shakeel Balroop and Shamshad Balroop for the costs of this contempt process in the amount set out below.[^1]
[51] Shakeel Balroop please rise. Shakeel Balroop has not purged his contempt despite repeated opportunities for him to do so including his entry into of a consent order with which he has yet to comply. He has no job and is best positioned to make the most meaningful effort to provide the disclosure of the inter-corporate movement of funds and to contact counterparties as ordered. I disagree with Mr. Toyne’s submissions that a conditional order will inhibit Shakeel Balroop from complying with the disclosure orders. In my view, confinement with a computer and a telephone will enable him to direct his full time and attention to complying.
[52] Therefore, Shakeel Balroop will be subject to a conditional sentence order. In addition to the usual statutory terms, including reporting to a conditional sentence supervisor, the conditional sentence order will include the following terms:
a) Shakeel Balroop will be under house arrest for the next thirty days. He is forbidden from leaving his residence except for medical emergencies, grocery shopping trips of less than two hours duration twice per week, to see his counsel, or to attend for cross-examination under subparagraph (d) below;
b) Shakeel Balroop will carry a copy of the formal sentencing order (including the conditional sentence order) with him whenever he leaves his residence. He will do so for the duration of the conditional sentence order;
c) Shakeel Balroop will remain in the province of Ontario for the duration of the conditional sentence order;
d) Shakeel Balroop shall comply with the disclosure obligations contained in the Mareva injunction dated October 24, 2014 and with para. 2 of the December 8, 2014 consent order on or before March 16, 2015. He will attend for cross-examination on his assets and the assets of the respondents, including the matters set to in para. 2 of the December 8, 2014 order, on a date to be scheduled by the counsel to the applicant during the week of March 16, 2015; and
e) Shakeel Balroop will be jointly and severally liable with Satt Balroop and Shamshad Balroop for the costs of this contempt process in the amount set out below.
[53] Shamshad Balroop please rise. As to Shamshad Balroop different considerations apply. In my view, as noted above, she was the contemnor who most severely and deliberately set about undermining and breaching the orders of the court. She defied the November 17, 2014 order that named her expressly. Her misconduct is more serious than the contemnor in Mercedes Benz, supra, who had purged his contempt prior to sentencing. Shamshad Balroop believes she can unilaterally create defences, unilaterally stay the court’s orders, unilaterally determine to refuse to obey an order, obfuscate and lie under oath, and say what she wanted when she wanted to protect her family’s finances. She believes that the ends justify the means. They do not. The law applies to her family as much as to any other. In my view, the objectives of deterrence, denunciation, and coercing compliance require a custodial sentence. As this is a last resort and the first sentence for this case, a short, sharp sentence is appropriate. Shamshad Balroop needs to understand that the court will enforce its orders and that compliance is not optional. I cannot see fashioning another remedy that will bring this home to her in light of her repeated conduct to date. Anything short of a custodial sentence would be a mere license fee to Shamshad Balroop and would risk exposing the administration of civil justice to disrepute in light of her overt and intentional disobedience.
[54] However, it is also likely that Shamshad Balroop’s presence may assist Shakeel Balroop and Satt Balroop in making disclosure especially where Shamshad Balroop’s banking facilities have been used to funnel money elsewhere. Therefore, I order Shamshad Balroop to comply with the disclosure obligations contained in the Mareva injunction dated October 24, 2014 and with para. 2 of the December 8, 2014 consent order on or before March 16, 2015 and to attend for cross-examination on her assets and the assets of the respondents, including the matters set to in para. 2 of the December 8, 2014 order, on a date to be scheduled by the counsel to the applicant during the week of March 16, 2015. Shamshad Balroop will be jointly and severally liable with Shakeel Balroop and Satt Balroop for the costs of this contempt process in the amount set out below. I sentence Shamshad Balroop to serve six (6) days in a provincial correctional institution, intermittently, commencing today for two days and then continuing immediately following the court hearing on March 23, 2015 for the remaining four days.
[55] I direct that a Form 60L Warrant of Committal issue against Shamshad Balroop in which the last paragraph shall read:
YOU ARE ORDERED TO ARREST Shamshad Balroop and deliver her to a provincial correctional institution today to be detained there for two days ending February 24, 2015 and then to arrest her again immediately following this court’s proceeding on March 23, 2015 and deliver her to a provincial correctional institution to be detained there for four days ending Mach 26, 2015.
[56] This endorsement shall be attached to the Warrant of Committal.
[57] This is important. At the hearing on March 23, 2015, the court will consider whether the respondents have fully complied with the court’s orders including this order. The court will hear submissions by any of the parties, based on evidence to be delivered for that hearing, concerning modifications to the sentences pronounced today – to increase or to lessen sentences based upon performance or non-performance of the terms as ordered as at that time.
[58] It should also be born in mind that para. 8 of the Mareva injunction provides that the order will cease to have effect if the respondents provide security by paying the sum of $247,304.38 into court. That remains an option for them if they wish to avoid the disclosure obligations of the Mareva injunction and the subsequent enforcement orders.
Costs
[59] The fixing of costs is a discretionary decision under s.131 of the Courts of Justice Act. That discretion is generally to be exercised in accordance with the factors listed in Rule 57.01 of the Rules of Civil Procedure. These include the principle of indemnity for the successful party (57.01(1)(0.a)), the expectations of the unsuccessful party (57.01(1)(0.b)), the amount claimed and recovered (57.01(1)(a)), and the complexity of the issues (57.01(1)(c)). Overall, the court is required to consider what is “fair and reasonable” in fixing costs, and is to do so with a view to balancing compensation of the successful party with the goal of fostering access to justice: Boucher v Public Accountants Council (Ontario), 2004 CanLII 14579 (ON CA), (2004), 71 O.R. (3d) 291, at paras 26, 37.
[60] The applicant seeks his costs of the contempt process in the amount of $36,687.94 on a substantial indemnity basis. In light of the finding of contempt, costs on a substantial indemnity basis are appropriate and proportional in my view. I have reviewed the applicant’s costs outlines. The rates are very reasonable. The hours are reasonable especially in that the Balroops’ own misconduct required the applicant’s counsel to incur much of the time that he did. However, as discussed briefly at the hearing, the costs outlines contain some time not properly referable to the contempt process that should be excluded. In all, I am satisfied that it is fair and reasonable for Shakeel Balroop, Satt Balroop, and Shamshad Balroop to be jointly and severally liable for the costs of the contempt process to date fixed on a substantial indemnity basis in the amount of $34,000.
F.L. Myers, J.
DATE: February 23, 2015
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Vincenzo Pronesti
Applicant
- and -
1309395 Ontario Ltd., 1794566 Ontario Ltd., 1794565 Ontario Ltd., Shakeel Balroop, Satt Balroop and Sham Balroop also known as Shamshad Balroop
Respondents
REASONS FOR DECISION
F.L. MYERS J.
Released: February 23, 2015
[^1]: I realize that costs orders suffer the same risk of non-payment as a fine. However, at least the funds will be paid to the applicant rather than to the state. The state’s interest is achieved through community service and the continued coercion of compliance with the underlying disclosure obligation.