CITATION: Aloe-Gunnell v. Aloe et. al, 2015 ONSC 1644
COURT FILE NO.: 21119/A2
DATE: 2015-03-24
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
TIIU MARI-ANN ALOE and VALVE ELISABETH ALOE-GUNNELL
Plaintiffs
– and –
ESTATE OF VALDEKO ALOE, LEMBIT PETER ALOE, TOOMIS ERKI ALOE, ALO LUMBER AND BUILDING SUPPLIES, JOHN ALO DEVELOPMENTS LIMITED AND ALO CONSTRUCTION CO. LIMITED
Defendants
Mr. N. Roth, Counsel for the Plaintiff Valve Elisabeth Aloe-Gunnell
Ms. Tiiu Mari-Ann Aloe, for Self
Mr. Wm. Scott, Counsel for the Defendants
HEARD: In writing
continued reasons for sentence
VARPIO J.
[1] Having previously found Ms. Aloe-Gunnell in contempt of Koke J’s March 11, 2011 Final Order, and having given a partial decision with respect to sentence during the February 13, 2015 sentencing hearing, I now turn to the outstanding aspects of sentencing.
[2] In Boily v. Carleton Condominium Corp. No. 145, 2014 ONCA 574, the Ontario Court of Appeal described the purposes of sentencing in civil contempt as follows:
The purpose of a penalty for civil contempt is to enforce compliance with a court order and to ensure societal respect for the courts: Vidéotron Ltée v. Industries Microlec Produits Électroniques Inc., 1992 29 (SCC), [1992] 2 S.C.R. 1065, at 1075. The remedy for civil contempt is designed not only to enforce the rights of a private party (See: Poje v. Attorney General (B.C.), 1953 34 (SCC), [1953] 1 S.C.R. 516 at 517; Frontenac Ventures Corp. v. Ardoch Algonquin First Nation, 2008 ONCA 534, 91 O.R. (3d) 1, at para. 37), but also to enforce the efficacy of the process of the court itself. Justice McLachlin powerfully expressed this broader purpose in United Nurses of Alberta v. Alberta (Attorney General), 1992 99 (SCC), [1992] 1 S.C.R. 901 at 931, stating:
[t]he 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.
[3] Rules 60.11 (1) and (5) of the Rules of Civil Procedure govern the imposition of sentences following a finding that a party is in contempt of an Order:
Motion for Contempt Order
60.11 (1) A contempt order to enforce an order requiring a person to do an act, other than the payment of money, or to abstain from doing an act, may be obtained only on motion to a judge in the proceeding in which the order to be enforced was made. R.R.O. 1990, Reg. 194, r. 60.11 (1).
Content of Order
(5) In disposing of a motion under subrule (1), the judge may make such order as is just, and where a finding of contempt is made, the judge may order that the person in contempt,
(a) be imprisoned for such period and on such terms as are just;
(b) be imprisoned if the person fails to comply with a term of the order;
(c) pay a fine;
(d) do or refrain from doing an act;
(e) pay such costs as are just; and
(f) comply with any other order that the judge considers necessary,
and may grant leave to issue a writ of sequestration under rule 60.09 against the person’s property. R.R.O. 1990, Reg. 194, r. 60.11 (5).
[4] As was noted in my earlier reasons, the moving parties are not seeking imprisonment and, during the course of the February 13, 2015 sentencing hearing, the parties were able to sign all documents necessary to effectuate the sale of the relevant portion of the New York property to a third party. As such, the moving parties now seek the imposition of a fine and costs as a result of the contempt finding. For her part, Ms. Aloe-Gunnell seeks costs. I will deal with each portion of the sentencing in turn.
COSTS
[5] I have considered the entirety of the parties’ written submissions on this subject. I note that the parties tendered lengthy submissions. I do not propose to reproduce all their arguments.
[6] The moving parties seek costs in the total of $69, 516.87 ($41,261.87 for Mr. Scott and $28,255.00 for Ms. Aloe). They base their request for costs upon the following:
a. Given the finding of contempt, costs on a substantial indemnity basis are appropriate;
b. The sale of the New York property was crucial to the completion of this extended litigation;
c. Ms. Aloe-Gunnell unnecessarily delayed the completion of the litigation through her actions including repudiating final agreements and commencing the New York lawsuit;
d. The commencement of the New York action was contemptuous and abusive of the Court process;
e. Mr. Scott’s clients seek $5,777.12 in costs as a result of Canadian appearances related to the New York lawsuit. They state that the New York courts “held that these costs were recoverable in the Canadian proceedings”; and
f. Ms. Aloe-Gunnell refused to admit that the matter had been resolved and failed to sign the documents necessary to terminate the litigation.
[7] Ms. Aloe-Gunnell suggests that she ought to be awarded costs in the circumstances since:
a. She submits that the abandonment of the outstanding grounds of contempt constitutes — at the very least — a “split success”;
b. The ponderous, repetitive and difficult to follow materials delivered by the moving parties unnecessarily complicated the matter;
c. Ms. Tiiu Aloe and Mr. Scott effectively argued the same motion and should not be entitled to both sets of costs;
d. The moving parties are actually making claims for damages “dressed up” as costs submissions; and
e. The moving parties have attempted to advance evidence in their submissions which is impermissible and cannot be relied upon by the Court.
Findings
[8] Firstly, as I indicated in my earlier reasons, I accept that I cannot rely upon aggravating facts that have not been proven beyond a reasonable doubt. As such, much of the moving parties’ submissions with respect to delay allegedly caused by Ms. Aloe-Gunnell’s failure to undertake certain acts must be rejected. The parties have made assertions about events that have not been proven beyond a reasonable doubt. As such, they are to be rejected.
[9] Rule 57.01 sets out the basis for costs in Ontario. The overriding principle is that costs should be fair and reasonable in the circumstances. Rule 57.01 states:
57.01 (1) In exercising its discretion under section 131 of the Court of Justice Act to award costs, the court may consider, in addition to the result in the proceeding and any offer to settle or to contribute made in writing,
(0.a) the principle of indemnity, including, where applicable, the experience of the lawyer for the party entitled to the costs as well as the rates charged and the hours spent by that lawyer;
(0.b) the amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed;
(a) the amount claimed and the amount recovered in the proceeding;
(b) the apportionment of liability;
(c) the complexity of the proceeding;
(d) the importance of the issues;
(e) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding;
(f) whether any step in the proceeding was,
(i) improper, vexatious or unnecessary, or
(ii) taken through negligence, mistake or excessive caution;
(g) a party's denial of or refusal to admit anything that should have been admitted;
(h) whether it is appropriate to award any costs or more than one set of costs where a party,
(i) commenced separate proceedings for claims that should have been made in one proceeding, or
(ii) in defending a proceeding separated unnecessarily from another party in the same interest or defended by a different lawyer; and
(i) any other matter relevant to the question of costs. R.R.O. 1990, Reg. 194, r. 57.01 (1); O. Reg. 627/98, s. 6; O. Reg. 42/05, s. 4 (1); O. Reg. 575/07, s. 1.
[10] In Astley v. Verdun [2013] ONSC 6734 (SCJ) at paras 52 to 58, Goldstein J. described the jurisprudence governing the imposition of substantial indemnity costs as it pertains to contempt:
The authorities in Ontario lean to the view that costs should generally be awarded on a substantial indemnity basis in contempt matters: Canadian National Railway Co. v. Plain, 2013 ONSC 4806, [2013] O.J. No. 3392 (Sup.Ct.) at para. 27. In 1307347 Ontario Inc. v. 1243058 Ontario Inc. (c.o.b. Golden Seafood Restaurant), [2001] O.J. No. 585 (Sup.Ct.) Nordheimer J. set out the rationale:
There ought to be something approaching a complete indemnity to the successful party in such motions since to do otherwise would involve some cost or punishment to the successful party arising solely out of the conduct of the other party in violating the court order.
In Canadian National Railway, supra, the contemnor was the spokesperson for the "Idle No More" protest group that blocked a railway track. He was found in contempt of court. Thomas J. was aware that the protest was "an exercise of expressive freedom" and that the contemnor was an aboriginal protestor. He awarded substantial indemnity costs, notwithstanding that the contemnor acknowledged his contempt, and attempted to purge the contempt, and apologized.
In S.N.C. Lavalin Profac Inc. v. Sankar, 2009 ONCA 97, [2009] O.J. No. 365, 94 O.R. (3d) 236, 304 D.L.R. (4th) 251 (C.A.) the Court of Appeal upheld an award of substantial indemnity costs, [2008] O.J. No. 2048, in a contempt matter. Laskin J.A. for the Court stated that the flagrant and intentional breaches of court orders justified the substantial indemnity award. The Court conducted no further analysis.
In Einstoss v. Starkman, 2003 2304 (ON SC), [2003] O.J. No. 96 (Sup.Ct.) LaForme J. (as he then was) examined the question of substantial indemnity costs on a contempt motion. He concluded that whether or not substantial indemnity costs should be awarded required a more nuanced analysis:
It would seem that some note of caution when dealing with contempt cases ought to be sounded. Courts should be wary of confusing the issues of costs in the main action (i.e., the action generating the contemned order), and costs in the contempt action. While it may be that a person's contemning an order made in the main action would be strong evidence of deliberate frustration, it does not automatically follow that it is. Substantial indemnity should be awarded in the contempt action only if the contempt itself or the conduct of the contempt trial evinces a deliberate attempt at frustration. This no doubt will occur frequently but it is not necessarily inevitable, since the contempt itself may not be sufficiently egregious.
In my view, a Court should not simply accept that substantial indemnity costs are the norm without an examination of what is fair and reasonable in the circumstances and the reasonable expectations of the parties. The factors set out in Rule 57.01 continue to play a role in guiding the Court's exercise of discretion. No doubt substantial indemnity costs are often appropriate, given the nature of contempt of court and the coercive purpose of substantial indemnity costs in these circumstances: Canadian National Railway, supra.
I characterize the test this way: there is a rebuttable presumption that substantial indemnity costs are appropriate in a contempt of court case. The presumption may be rebutted where the contemnor is suitably contrite, has attempted to purge his or her contempt, has taken steps to minimize costs incurred by the other party, and the contempt itself is towards the lower end of the "flagrant and wilful" scale.
Substantial indemnity costs are appropriate in this case. Such costs are fair to both parties for the following reasons:
• Mr. Verdun's apology, while a mitigating factor on sentencing, has less force when considered in the costs context. It came late in the process. It also came after much protracted litigation. Mr. Verdun's decision to represent himself (also until late in the process) had the effect of driving up costs.
• Regarding the manner in which Mr. Verdun conducted the proceedings, I certainly do not take issue with his right to represent himself. I also do not take issue with his right to conduct the case in a manner of his choosing (within reason) but he must also accept the consequences of doing so. Mr. Verdun is not an ingénue who is unfamiliar with the legal system. He is certainly more sophisticated than many unrepresented persons who represent themselves in civil litigation matters. He was well aware that contempt proceedings might well result in substantial indemnity costs.
• I have already discussed the nature of the contempt itself. It is not on the lower end of the "flagrant and wilful" scale. The nature of the contempt does not tip the scales against substantial indemnity costs.
[11] With respect to the facts of this case, I note the following:
a. This is Ms. Aloe-Gunnell’s second finding of contempt in the instant lawsuit;
b. The contemptuous commencement of the New York lawsuit led to lengthy delays associated with both the hearing of the case and the expiration of the appeal period (although the time required to hear the case and the expiration of the appeals period were not, of themselves, inherently unreasonable);
c. While many of the grounds for contempt were abandoned once the “narrow” contempt finding was made, I disagree with Ms. Aloe-Gunnell that such abandonment constitutes a “split result”. Instead, the moving parties were successful in their pursuit of a contempt motion and chose not to pursue further grounds therefor. Such a decision is eminently understandable when one considers the amount of time the parties have been before the Court;
d. Ms. Aloe-Gunnel tried to obviate the March 11, 2011 Final Order virtually from the moment it was imposed. While I make no findings that she negotiated in bad faith subsequent to that date, nor do I find that she failed to sign documents she ought to have signed (such findings would have required viva voce evidence), her counsel’s position that Ms. Aloe-Gunnel acted in good faith is unsupported by the facts (including writing to Koke J. in late March 2011 seeking to change important terms of the Order and her subsequent two findings of contempt);
e. Ms. Aloe-Gunnell received legal advice prior to commencing the lawsuit;
f. As in Astley v. Verdun, the contemnor has apologized, but rather late in the day;
g. The contempt hearing was complicated. Although the facts underlying the finding of contempt was relatively simple (i.e. Ms. Aloe-Gunnell commenced litigation in New York), the legal analysis thereof was relatively complex. Further, the factual matrix from within which the New York lawsuit was commenced was indeed complex; and
h. The matters involved are very serious and involve both the integrity of the Court process as well as a piece of land whose value is substantial.
[12] Therefore, when I balance the above-referenced factors, it is clear to me that costs on a substantial indemnity are appropriate. The aggravating features outlined above clearly outweigh the mitigating facts given the seriousness of the matter to the parties, the delays caused by the commencement of the New York lawsuit, the complexity of the affair, and, most importantly, the fact the contemnor committed a second act of contempt.
[13] Mr. Scott’s clients seek $5,777.12 in costs for his Canadian dealings with the New York matter. The moving parties attempted to have the New York courts make a costs award for this sum [although I note the number quoted by the New York Court is somewhat different than that sought today – I suspect that difference is owed to differences in exchange rates]. The New York Court ruled as follows:
As a threshold matter, that branch of defense [sic] counsel’s application which seeks an award of attorney’s fees to attorney Scott for fees generated in the Ontario, Canada action is denied on jurisdictional grounds. Payment of those fees is a Canadian matter to be adjudicated by the Superior Court of Justice in Ontario, Canada. Similarly, to the extent Defendants seek authorization from this Court to pay any award from the escrow account established by the Canadian court, that application is also denied on jurisdictional grounds. Authorization for withdrawal of same, both on jurisdictional grounds and as a matter of comity, requires authorization from the Canadian court.
[14] As such, the costs sought by Mr. Scott’s clients were considered to be a part of the Canadian litigation by the New York courts. I agree. The $5,777.12 expense is directly related to the act of contempt. But for the contemnor’s actions in commencing the New York lawsuit, the moving parties would never have had to incur said expenses. Since the $5,777.12 is directly related to the contemptuous act, I will include that sum in the award for costs.
[15] Nonetheless, I agree with Ms. Aloe-Gunnell that there appears to have been some duplication of effort by Mr. Scott and Ms. Tiiu Aloe. Upon perusal of their respective costs outlines, it is clear that Mr. Scott undertook an appropriate amount of work to advance his client’s causes. However, in so far as both counsel appeared in court and took identical positions, it would not be reasonable for the Court to award substantial indemnity costs for the appearance of both counsel (especially in light of the fact that Ms. Tiiu Aloe was also appearing as a self-represented litigant). Further, some of the time allocated to drafting affidavits by Ms. Tiiu Aloe appears to be somewhat high (i.e. 44.5 hours devoted to the drafting and re-drafting of Mr. Toomas Aloe’s affidavit, etc.). As such, I am deducting $10,000 from the amount of money that will be awarded to Ms. Aloe.
[16] Therefore, I award the moving parties a total of $59,516.87 in costs on a substantial indemnity basis ($41,261.87 for Mr. Scott’s clients and $17,255.00 for Ms. Aloe).
FINE
[17] As noted above, Rule 60.11(5)(c) empowers the Court to impose a fine as penalty for being in contempt of Court.
[18] As was eluded to in Boily v. Carleton Condominium Corp., the need to punish a contemnor flows directly from the need to ensure that Court Orders are followed and that the Court process is respected. The need for specific and general deterrence is thus heightened in cases of contempt. Nonetheless, the Courts must always be careful to weigh all the aggravating and mitigating factors of a given case. With that in mind, I must consider the factors described above in paragraph 11. Upon review of same, the fact that the contemnor has committed a second act of contempt in the same proceeding demands that a fine be paid. Irrespective of all the mitigating circumstances of this case, the failure to impose a fine in this instance would demonstrate that the Court system failed to protect its Orders with adequate penal sanctions. Such a demonstration would, in my estimation, erode confidence in the administration of justice.
[19] With respect to quantum, I place considerable weight upon the fact that this is the second act of contempt that caused considerable litigation delays and several costly court appearances. Nonetheless, it should also be noted that the contemnor did receive legal advice a fiori and has apologized to the Court (although only recently). Upon balancing all the factors, I order that Ms. Aloe-Gunnell ought to pay a fine in the amount of $10,000. Such a quantum recognizes the importance of obeying Court orders while acknowledging the mitigating circumstances of the case.
MECHANICS OF PAYMENT
[20] I believe that Mr. Scott currently holds $150,000 in trust as a result of the March 11, 2011 Order. He released $200,000 to Ms. Aloe-Gunnell on the last court date. I also note that Ms. Aloe-Gunnell and her previous lawyer are currently disputing a $23,054.83 bill which funds Mr. Scott is also holding in trust. This sum will only be released by Mr. Scott pursuant to a further Court Order or as a result of Ms. Aloe-Gunnell and Mr. Skeggs’ consent.
[21] Thus, I order that Mr. Scott release $67,428.30 to Ms. Aloe-Gunnell within 7 days of this judgment ($150,000 - $59,516.87 - $23,054.83 = $67,428.30). I further Order that Ms. Aloe-Gunnell pay the $10,000 fine within 2 business days of the receipt of these funds.
[22] With respect to Ms. Aloe-Gunnell’s claim for interest, I agree that she is entitled to interest on $290,483.13 ($90,483.13 + $200,000 already released = $290,483.13) pursuant to the Courts of Justice Act. Mr. Scott has 30 days from the date of the release of the judgment to pay the appropriate amount of interest to Ms. Aloe-Gunnell’s solicitor.
Varpio J.
Released: March 24, 2015
CITATION: Aloe-Gunnell v. Aloe et. al, 2015 ONSC 1644
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
TIIU MARI-ANN ALOE and VALVE ELISABETH ALOE-GUNNELL
- and -
ESTATE OF VALDEKO ALOE, LEMBIT PETER ALOE, TOOMIS ERKI ALOE, ALO LUMBER AND BUILDING SUPPLIES, JOHN ALO DEVELOPMENTS LIMITED AND ALO CONSTRUCTION CO. LIMITED
CONTINUED REASONS FOR SENTENCE
Varpio J.
Released: March 24, 2015