CITATION: Aloe-Gunnell v. Aloe et. al, 2015 ONSC 191

COURT FILE NO.: 21119/A2

DATE: 2015-01-12

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: September 18 and 19, 2014

varpio, j.

REASONS FOR DECISION

[1] This is a motion brought by the Defendants and the Plaintiff, Ms. Tiiu Mari-Ann Aloe, seeking a finding that the co-Plaintiff, Ms. Valve Elisabeth Aloe-Gunnell (“Ms. Aloe-Gunnell”) is in contempt of Koke J.’s March 11, 2011 Final Court Order. The litigation has a tortured history dating more than ten years and has been the subject of several court appearances. The moving parties allege that Ms. Aloe-Gunnell has attempted to thwart the fulfilment of the settlement that she entered some three-and-a-half years ago. The moving parties claim that Ms. Aloe-Gunnell has attempted to defeat the settlement by failing to sign releases, by dragging out proceedings, and through other means.

[2] It is beyond dispute that Ms. Aloe-Gunnell commenced a lawsuit in New York in 2014 to secure certain relief, much of which was duplicative of the relief granted in the 2011 Final Order. Ultimately, the New York suit was dismissed as that court decided that Ontario was the forum conveniens for the litigation. Ms. Aloe-Gunnell submits that the commencement of the New York lawsuit was not contemptuous because her American lawyer advised her that commencing the New York claim was legally permissible.

[3] Despite Ms. Aloe-Gunnell’s submissions, it is clear that Koke J.’s Order made it obvious that he was maintaining carriage of the matter. Since reliance upon incorrect legal advice is no defence to a contempt allegation, the commencement of the New York lawsuit defied Koke J.’s authority to seize himself. As such, the commencement of the New York lawsuit was, by definition, a contemptuous act. For the reasons that follow, I will grant the motion.

FACTS

[4] This lawsuit was commenced in 2002 as an estates-related matter regarding the disposition of the assets of the Estate of Valdeko Aloe. The specifics of the original dispute is immaterial to my analysis, however, the property of the Esate included automobiles, including a Jaguar, and real property including a cottage in Parry Sound and acreage in Highland Falls, New York.

[5] The Highland Falls property is located in the Hudson Valley in New York State. During the litigation, it was agreed that the property would be divided as between Ms. Aloe-Gunnell (“Val’s Piece”) and the other parties to the litigation (“Purchase Piece”). A public-sector buyer (“Scenic Hudson”) was secured for the Purchase Piece. Scenic Hudson is litigation averse and agreed to purchase the Purchase Piece provided that the instant litigation ended and provided that Ms. Aloe-Gunnell sign certain releases.

[6] The matter remained before the courts for the next 12-odd years dealing with a variety of matters (some essential, some tangential) until, finally, the parties were able to resolve the litigation on March 11, 2011. Pursuant to Minutes of Settlement flowing from negotiations, Koke J. signed a March 11, 2011 Final Order that stated as follows:

THE MOTION BROUGHT BY the Defendants for an Order: for the sale of the Highland Falls, New York property as described in Schedule A hereto; to set aside the transfer of the New York property from Alo Construction Co. Limited into the names of the personal shareholders; vesting title of the New York property into the name of Alo Construction Co. Limited; for the dismissal of the various Aloe actions and applications without costs, namely No. 20121/A0, No. 22053/A3, and No. 23662/06; and for other relief was heard by this COURT, on this date.

UPON READING THE Notices of Motion, and the Affidavits of: Thomas and Peter Aloe sworn on November 5, 2010: Thomas Aloe sworn on November 8,2 010; Tiiu Aloe sworn on March 3, 2011; and Thomas Aloe sworn on March 5, 2011 and the pleadings and proceedings herein, and upon hearing Counsel for the parties, and upon reading the Minutes of Settlement signed by all the parties, filed:

THIS COURT ORDERS THAT:

1. In lieu of any share in the New York property or proceeds of the sale to Scenic Hudson, or any other party, Val Aloe is to be deeded the New York property (approximately 3.43 acres) being the commercial area subject to the conservation easement only, after the severance is obtained which is to be applied for, forthwith.

2. There will be a Court Order vesting title in Alo Construction Co. Limited and setting aside the July 13, 2000 conveyance retroactive to February 20, 1990.

3. Val Aloe to receive the sum of $350,000.00 from the Defendants who have four months time to pay failing which this Order may be registered on the title of 23 Elliot Road and 40 Sunnydale Road. This sum is received by Val Aloe for general damages to release claims against all parties.

4. The parties will proceed with the Parry Sound transfers into three parcels after payment to Val Aloe of the sum noted above.

5. Valve Aloe is to choose one remaining motor vehicle, formerly or now belonging to her father and any personal mementos and building materials that remains at the company office and storage building. For these purposes, Val Aloe is to be provided with reasonable access.

6. The parties are to make themselves available to sign any document required to effect these Minutes.

7. The sale of the rear portion of the Highland Falls property to Scenic Hudson Land Trust, Inc. by way of an Option Agreement and by Contract of Sale when the option Agreement is exercised is approved by this Court.

8. Any party may ask for further directions from the Court in Sault Ste. Marie.

9. Formal Orders in relation to the Minutes of Settlement will be prepared by the parties and remitted for signature to Justice E. Koke.

[7] Although I do not have the Minutes of Settlement before me and the parties did not make any submissions in this regard, it is clear from the preamble of the Order that the relief granted in the Order arose as a result of Minutes of Settlement filed (i.e. the March 11, 2011 Order dealt with the Highland Falls property because the Minutes of Settlement dealt with that property.)

[8] On March 13/14, 2011, Ms. Aloe-Gunnell wrote to counsel (and sent a copy to Koke, J.) indicating that she wished to repudiate the settlement:

March 13, 2011

Attn: Mr. Skeggs and Mr. Scott

ALOE – SETTLEMENT MINUTES

1. Needed Change

There needs to be a change to the settlement minutes relating to New York.

I learned today that the 3 acre business piece (that was to be severenced and transferred to my name) does NOT have the current value of $400,000-$600,000 which Mr. Scott indicated on Friday.

The value of this property has been grossly misrepresented and I believe the property under the terms offered – with conservation easement – is almost worthless.

A local developer & P.Eng. who are very familiar with the property – indicate the current value to be $100,000 or even less – because of the market and the conservation easement Mr. Scott is promising to Scenic Hudson.

There apparently is a wide rock ridge that runs across the front boundary of this 3 acre piece. And, if there is the proposed conservation easement at the rear boundary of the property – this makes the buildable area even smaller.

2. My Proposal to Resolve NY

That the amount of $500,000 (splitting the difference between the $400,000 and $600,000 which I believed I was receiving in value) be paid to me as “general damages”. The $500,000 could be paid in instalments over-time, to buy me out of NY and help your clients with their tax mess.

3. Benefits to Mr. Scott’s Clients

There are notable advantages why Mr. Scott’s clients should maintain the 3 acre commercial for themselves at this time:

a) This 3 acre piece is the “front door” and entrance to the property. If Scenic Hudson does NOT end up buying – then this 3 acre piece will be needed for the next buyer. It would therefore be to the benefit of Mr. Scott’s clients to keep the 3 acres as back-up; and

b) I am told that the value of the property as a whole is “maximized” if the 3 acre commercial piece and the 31 Acres (for purchase by Scenic Hudson) are kept together and sold to the same person.

This is because the commercial piece provides the road and servicing access (with several right-of-ways from Main Street and neighbouring property) and needed water/sewer coming from Main Street where the 3 acre commercial piece is located.

I will be instructing Mr. Skeggs to bring this to Justice Koke’s immediate attention if we are unable to resolve this to satisfaction. I believe that he would agree that all parties have to walk away from this – with fair terms.

Please advise.

Yours truly,

Val Aloe-Gunnell

[Emphasis in Original]

[9] Without belaboring the point (as it is simply background), title to the Highland Falls property had been transferred between the parties on several occasions prior to Koke J.’s Final Order. Subsequent to March 11, 2011, Ms. Aloe-Gunnell transferred her interest in the property (1/6 share) to a trust with herself as trustee. Said transfer effectively blocked the parties’ ability to act upon the Final order. Ms. Aloe-Gunnell then moved to set aside the March 11, 2011 Order. The other parties brought a contempt motion. Koke J. heard both motions and stated:

[8] On Monday, March 14, 2011, three days after the minutes of settlement were signed, Valve Gunnell sent a letter to the court and to opposing counsel indicating that she did not wish to conclude the settlement on the terms set out in the minutes of settlement.

[9] Subsequently she brought a motion to set aside the minutes of settlement and the orders which were signed in relation thereto.

[10] Prior to the date scheduled to hear her motion to set aside the settlement, Valve Gunnell transferred her interest as a shareholder in the New York property to a third party in trust. This transfer effectively blocked the transfer of the New York property to Aloe Construction Co. Limited. When the defendants and Tiiu Aloe discovered that this transfer had taken place they brought their own motion for contempt.

[11] The motions were scheduled to be heard on December 8, 2011. On that date I made an order that I would consider any contempt cured and I would dismiss the motion for contempt provided the plaintiff transferred the property back to herself by January 23, 2012. Both motions were adjourned to January 23, 2012.

[12] The property was subsequently transferred back to Valve Gunnell and on January 23, 2012 the motion to set aside the settlement was argued.

[20] With respect to the motion for contempt, I note that the motion resulted in Valve Gunnell curing her contempt. It can be said therefore that the defendants and Tiiu Gunnell were successful in relation to this motion.

[70] The motion [to set aside the settlement] is dismissed.

[10] Thus, Ms. Aloe-Gunnell was unsuccessful in setting aside the settlement and was effectively found to be in contempt of the March 11, 2011 Order. She had purged that contempt by transferring the property back to herself such that final settlement remained possible.

[11] Matters continued forward at a slow pace (the specifics of which are immaterial to my reasons) when, in 2013, Ms. Aloe-Gunnell commenced a lawsuit in New York State wherein she sought the following relief:

22. That the Canadian Judgment against the Defendants and the New York Orange County property should be recognized in favor of Plaintiff in the following amounts.

(a) U.S. $716,000.00, representing 3.43 acres of the New York property [the alleged value of Val’s Piece] that is subject to attachment verified by the record and affidavits filed in the Canadian Court;

(b) U.S. $360,416.00, which is $350,000.00 general damages in Canadian dollars as valued on March 11, 2011 and converted at 1.02976 US dollar rate that the Canadian Order provided Val Aloe to receive specifically $350,00.00 Canadian dollars;

(c) U.S. $225,250.00 that Val Aloe was awarded a transfer of Parry Sound property with a value of $222,250.00, pursuant to a purchase agreement and this amount is sought for attachment on the Orange County, New York property or on foreclosure;

(d) U.S. $100,000.00 for personal property, which includes a vintage collectors antique Jaguar V12 personal automobile;

(e) Costs to be assessed;

(f) Additional interest accrued since the date of the Canadian Judgment; and

(g) Attorneys’ fees and costs in the present action.

23. That the specific value total of all sums owed to Plaintiff equals in excess of $1,388.250.00.

WHEREFORE, Plaintiff demands judgment against Defendants as follows:

(a) Recognizing and enforcing the Canadian Judgment by awarding Plaintiff the following amounts:

a. $716,000.00

b. $360,000.00

c. $225,250.00

d. $100,000.00

Total specific award: $1,388,250.00

(b) Awarding fees, costs, and disbursements to be assessed by the Canadian Court;

(c) Awarding additional interest accrued since the date of the Canadian Judgment;

(d) Awarding attorneys’ fees, costs, and disbursements in the present action;

(e) Awarding a judgment in that amount and that in failure to pay the aforementioned amounts and specific award foreclosure of the Orange County, New York property and sale proceeds to be paid to Plaintiff in an amount necessary to satisfy the award plus an award for any deficiency judgment upon the sale of the land; and

(f) Awarding such other and further relief as deemed appropriate including any non-monetary judgments as may be enforceable as a matter of comity under the New York common law.

[12] In an attempt to explain why she commenced the New York lawsuit, Ms. Aloe-Gunnell swore an affidavit indicating that her intent was not to avoid judgment in Ontario but to follow the advice of legal counsel who advised her that New York was a forum conveniens for collecting upon money allegedly owed to her pursuant to the settlement. She stated:

180. In the fall of 2013, I contacted Mr. Peck, and received advice as to the enforcement of the Settlement Order in New York State.

181. I was advised by Mr. Peck that the outstanding debt could be protected through an action being commenced in New York State. The action would rely upon the Settlement Order, and the default of the parties therein. While the action might be termed as “foreclose of property”, it was in reality a form of lien or charge which would be registered against title to the New York Property if successful.

182. Mr. Peck advised this was the normal and proper method of enforcement where there is an outstanding debt, which debt is evidenced by the Settlement Order.

183. I retained Mr. Peck to take reasonable steps to protect my interest in the New York Property as set out in the Settlement Order. In my view, there was no reason why any part of the $350,000.00 (less the award of costs) remained outstanding. In my view, this was default on the part of the other parties.

184. My New York action was commenced on November 13, 2013.

185. At no time did I understand or expect that the New York action commenced by me would actually result in my obtaining title to any of the New York Property. At no time did I instruct Mr. Peck to take steps to seek to have the New York Property put into my name due to the default of the Defendants.

186. I categorically deny that I commenced the New York action in an attempt to disregard, defy or disrespect the Settlement Order. I felt that the failure of the other parties to abide by the Settlement Order was so abusive that there was really no choice but to be somewhat proactive to protect my interests.

187. I understood the New York action to be a means of enforcing my rights under the Settlement Agreement.

188. Mr. Peck was aware of the Settlement Agreement and the Settlement Order. I relied upon his advice as an attorney to commence the New York action. I specifically canvassed with him whether the New York action would be regarded as defying the Settlement Order. In his opinion, I would be moving to enforce the outstanding obligations owed to me under the Settlement Order, not defying same.

[13] Ms. Aloe-Gunnell also filed an affidavit from her American lawyer who advised:

5. That this Judgment [monies allegedly owing to Val as a result of the March 11, 2011 Order] was unpaid and had been dormant for over 2 years in zero resolution for Ms. Gunnell who deserved to have the March 2011 Ontario Order resolved regarding the payment due her from her father’s Estate.

6. That waiting 2 years to collect on a large money judgment justifies taking a legal action to collect or enforce a legal judgment. That since the Ontario attorneys who entered the judgment had been ineffective and futile in resolving the judgment for over 2 years with no resolution in sight, the filing of the New York action was meant to affirm the money judgment of the Ontario court into a money judgment in the State of New York and nothing more. This judgment would have prompted the Defendant’s [sic] to make a payment or resolve the judgment which would have been used to record a lien on the land in New York. That this New York case did not prevent the Defendants from settling with the Plaintiff Valve Gunnell. It did not prevent from them at any time from adhering to the Ontario Order and it did not prevent from severencing the New York property as what was required to do since March of 2011 or over 3 years since the original order. That this lien would serve to enforce the Ontario Defendants to pay what as obligated to the Plaintiff or then a secondary action would have been initiated to record a judgment/lien on the New York Property.

7. That the New York action was initiated solely to affirm the judgment of the Ontario Order into a judgment lien on the real estate in New York. That this registration of the Ontario Judgment in New York is the same as execution on a domestic judgment. That no steps were ever taken to secure full ownership of the entire property and that a sale by judicial means would have been the very last resort for the March 2011 debt that has never been paid. That Val Gunnell never instructed this counsel to foreclose on any property.

8. That the New York action did not prevent the Defendant from complying with the Ontario Order and full-filling the decree set for severance of any of the United States property.

9. That the New York action was only instituted upon the failure of the Ontario Defendants to enforce provision 1, 2 and No. 3 in the March 2011 Ontario Order. That this action had no effect on the duty of the Defendants’ to begin an application for a severance as required under the March 2011 order, nor did the New York action prevent the Defendants from severance of any of the parcels in New York. Any potential purchaser could have taken on the duty of severance which Val Gunnell would have agreed to as long as the Defendants would have agreed.

10. That the commencement of the New York action was to protect the Judgment Creditor Val Gunnell to effectuate the Order she was entitled to enforce exactly as written and no more and certainly not to contravene the court’s order. [Emphasis in original.]

[14] Ms. Aloe-Gunnell’s current Canadian counsel advised me that Ms. Aloe-Gunnell sought relief from the New York courts because she did not like the speed at which the Ontario courts dispensed justice. Further, counsel submitted that Ms. Aloe-Gunnell was not obligated to return to Justice Koke to enforce her rights in New York:

I still think it’s a long step to say that you can infer the animus [of attempting to renegotiate the settlement] because she’s out there trying to secure her rights and when you look at the big picture of how things have been moving around, the assets have been dissipated as set out in her affidavit, she’s almost justified in saying I’ve got to do things a little quicker; nothing is happening here.

[15] In 2014, the New York courts dismissed the New York lawsuit:

Although, as Plaintiff correctly asserts, New York has traditionally been a generous forum in enforcing foreign judgments for money damages only, that is not the issue presented here. Here, the record reveals that the Canadian Orders, which is the subject of this litigation, is currently the subject of continuing litigation in Ontario, litigation which has yet to be resolved and which has resulted in the issuance of multiple Orders, the most recent being entered on February 14, 2014. Additionally, and despite Plaintiff’s contentions to the contrary, certain aspects of the Canadian Order have yet to be reduced to specific dollar amounts; instead the order directs certain specific and discreet actions required to be undertaken by each party, actions which include, inter alia, the sale of real estate, the transfer of real estate, the inspection and selection of an automobile, and the inspection and selection of various personal effects of the Decedent.

Here, the foreign Order purportedly presented to the Court for enforcement does not constitute a monetary judgment in favor of the Plaintiff for which enforcement may be had. Instead, it merely directs that a specific portion of the Highland Falls land be deeded solely to Plaintiff and nothing more. Were the relief to be limited to compelling such compliance, enforcement in that limited context would be proper. However, Plaintiff in essence contends that the value of that specific portion of the land was misrepresented to her, in the context of the Canadian Estate proceedings [and presumably the negotiations leading up to the settlement] and therefore seeks a monetary award in lieu of the conveyance. That relief goes well beyond the ministerial power which this Court possesses and is embraced within Article 53; it calls into question the validity of the initial Order itself based upon the alleged material misrepresentations. That is an issue that can only be addressed by the Canadian Court, the Court of origin, not his Court. In fact, the only portion of the March 11, 2011 Canadian Order which specifically provides for a monetary payment to the Plaintiff also provides for a remedy in the event of non-payment; it provides for the transfer and conveyance of certain Canadian real property.

In sum, this Court lacks the requisite subject matter jurisdiction necessary to entertain, and adjudicate, Plaintiff’s claims. Thus, that branch of Defendants’ motion, which seeks dismissal based upon the lack of subject matter jurisdiction must be granted.

Further, and in part, for the reasons cited supra, Plaintiff’s remaining argument (i.e. that evidence has been presented in the Canadian Action, and adopted by the Canadian Court, regarding the value of certain parcels of real property and the vintage motor vehicle), is likewise misplaced.

This Court’s power is limited to the ownership of the Highland Falls real property itself and nothing more. The remainder of the relief requested, which includes, inter alia, the valuation of the New York property, the foreclosure of the New York property, and the assessment of a monetary award go well beyond this Court’s statutory powers and those powers conferred under Article 53. Notably, the Canadian Court has made additional factual findings and determinations, including inter alia, a finding that the $350,000, previously awarded, be held in escrow, pending further court order. The Canadian proceedings therefore remain in a state of flux and are not final.

Having addressed the jurisdictional and joinder issues, the Court now turns to the issue of whether sanctions are warranted, as asserted by Defendants, based upon the purported frivolous nature of the relief sought.

CPLR §8106 vests the court with the power, in its sound discretion, to award costs and reasonable attorneys’ fees to the opposing side. See, Mackey v. Dosiak, 15 Misc. 3d 161, 830 N.U.S. 2d 451 (2006). 22 NYCRR 130-1.1(a) also provides, in relevant part, that “[the] court, in its discretion, may award to any party or attorney...the costs [thereof] in the form of reimbursement for actual expenses reasonably incurred and reasonable attorneys’ fee resulting from frivolous conduct...”. (Emphasis Supplied).

22 NYCRR 130-1.1(c) provides, in relevant part, that conduct is deemed frivolous if such conduct: (i) is completely without merit in law and cannot be supported by a reasonable argument for an extension, modification or reversal of existing law; (ii) is undertaken primarily to delay or prolong the resolution of the litigation, or to harass or maliciously injure another; or (iii) it asserts material factual statements that are false.

Here, the Court concludes, and so finds, that Defendants are entitled to reimbursement for the costs and reasonable attorney fees incurred in connection with the defense of the pending action. Not only are the limitations imposed by CPLR Article 53, as to the enforcement of a foreign judgment, clear and well defined, the record is replete with evidence that the issues sought to be litigated herein are not, and were not, final; they are, and were, being actively litigated, on an ongoing basis, in the Canadian Forum... [Bold added]

[16] Thus, the New York courts dismissed the litigation and effectively found Ms. Aloe-Gunnell’s New York lawsuit to be frivolous.

[17] In the motion before me, the moving parties seek to have Ms. Aloe-Gunnell’s conduct declared contemptuous. On February 14, 2014, Koke J. granted Ms. Aloe-Gunnell’s request for an adjournment of this second contempt application. In granting the adjournment, Koke J. stated as follows:

[7] I have case managed these proceedings for last three years, and I signed the orders of March 11, 2011. These orders were signed on the basis of Minutes of Settlement which were signed after the parties negotiated for about 6 hours in the Sault Ste. Marie court house that day. Ms. Aloe-Gunnell was represented by Mr. Fred Skeggs, a capable and senior Sault Ste. Marie lawyer, throughout these negotiations.

[8] There have been a number of proceedings related to this matter following that date, including an unsuccessful motion by Ms. Aloe-Gunnell to set aside the March 11, 2011 order on the basis that it was obtained as a result of fraud, and that she signed the Minutes of Settlement because she felt physically intimidated by her sister Tiiu.

[9] I made a finding that there was no basis for these allegations of fraud and intimidation, and the motion was dismissed.

[10] Following her unsuccessful attempt to set aside the consent orders, Ms. Aloe-Gunnell has taken additional steps which have resulted in delaying the final completion of the March 11, 2011 settlement. These steps have included retaining Sault Ste. Marie lawyer John Walker to essentially re-negotiate the settlement, filing an appeal of my order denying her motion to set aside the March 11, 2011 order, an appeal which I understand was abandoned at the last hour, and most recently retaining a law firm in the state of New York to commence an action against the defendants.

[11] I have read the pleadings in the New York state action and the best term I can find to describe the allegations and relief claimed therein is “outrageous”. Essentially, she is attempting to re-litigate issues which have been the subject matter of legal proceedings between her and her siblings in the Superior Court in the Province of Ontario for the last 13 years.

[12] The New York action includes a claim for foreclosure on a property in New York state which she agreed to deed to her siblings in the March 11, 2011 order. I note that one of the bases for my earlier finding that Ms. Aloe-Gunnell was in contempt was that after March 11, 2011 she attempted to frustrate the transfer of this same property by deeding her 1/6 share of the property to herself as trustee for a non-existent trust.

[13] Accordingly, on the basis of the sworn affidavit of Ms. Bashaw, and against the background of what are clearly Ms. Aloe-Gunnell’s attempts to frustrate the completion of the March 11, 2011 order, I find that there exists considerable doubt in my mind that this request for an adjournment is made because she was not properly served, and that this is not a further attempt to delay these proceedings, and provide Ms. Aloe-Gunnell with further time to pursue the New York state litigation. ...

[18] The moving parties plead that Ms. Aloe-Gunnell’s conduct has been contemptuous and has been designed to frustrate the settlement. Specifically, they rely upon the following as grounds for contempt:

(1) Refusing to accept the Order as final;

(2) Actively obstructing, interfering with or clouding the title of the New York property;

(3) Continuing to bring vexatious and frivolous legal actions based solely on the same grounds, facts and circumstances that were already completely decided in the March 11, 2011 Order;

(4) Attempting to interfere with, block or frustrate the sale and the severance of the New York property to Scenic Hudson;

(5) Directly or indirectly communicating with Scenic Hudson and directly or indirectly threatening to sue Scenic Hudson;

(6) Commencing a legal action in the state of New York in an attempt to re-open issues already decided by the Canadian Courts and including claims for damages based on improper, spurious or nonexistent grounds, resulting in substantial legal costs to be incurred by the Defendants;

(7) Refusing to sign any documents required to give effect to the Minutes of Settlement contrary to paragraph 12 of the Order of Justice Koke on March 11, 2011; and

(8) Generally continuing a campaign to block, frustrate, set aside or vary the final Order of Justice Koke on March 11, 2011 pursuant to Minutes of Settlement voluntarily signed by Valve Aloe-Gunnell and approved by her Counsel of Record.

[19] During oral submissions, counsel for the moving parties submitted that the moving parties do not wish to imprison Ms. Aloe-Gunnell, but are simply attempting to settle the litigation and want Ms. Aloe-Gunnell to sign the necessary releases to effectuate the sale of the Purchase Piece to Scenic Hudson.

ISSUE

[20] Does the evidence before me prove contempt regarding Ms. Aloe-Gunnell’s alleged ex facie contempt?

THE LAW

[21] Rule 60.11 of the Rules of Civil Procedure governs civil contempt motions:

CONTEMPT 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).

(3) An affidavit in support of a motion for a contempt order may contain statements of the deponent’s information and belief only with respect to facts that are not contentious, and the source of the information and the fact of the belief shall be specified in the affidavit. R.R.O. 1990, Reg. 194, r. 60.11 (3).

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).

[22] The Ontario Court of Appeal dealt with the test for contempt at paragraphs 20 to 22 in Bell ExpressVu Ltd. Partnership v. Torroni, 2009 ONCA 85, [2009] O.J. No. 356 (at paras 20 to 22):

A finding of contempt of court is a serious matter that is quasi-criminal in nature. It is "first and foremost a declaration that a party has acted in defiance of a court order": Pro Swing Inc. v. Elta Golf Inc., 2006 SCC 52, [2006] 2 S.C.R. 612, at para. 35. The potential penal sanctions facing a contemnor underscore the seriousness of such a finding. As the Supreme Court of Canada has observed, "[t]he penalty for contempt of court, even when it is used to enforce a purely private order, still involves an element of 'public law', in a sense, because respect for the role and authority of the courts, one of the foundations of the rule of law, is always at issue": Pro Swing, at para. 34, citing Vidéotron Ltée v. Industries Microlec Produits Électroniques Inc., 1992 CanLII 29 (SCC), [1992] 2 S.C.R. 1065, at p. 1075. This court has recently reaffirmed these principles in Korea Data Systems Co. v. Chiang, 2009 ONCA 3, at paras. 10-11. It is for these reasons that motions for contempt are often said to be strictissimi juris, i.e., that all proper procedures must be strictly complied with: see Dare Foods (Biscuit Divisions) Ltd. v. Gill, 1972 CanLII 506 (ON SC), [1973] 1 O.R. 637 (H.C.J.); Toronto Transit Commission v. Ryan (1998), 1998 CanLII 14635 (ON SC), 37 O.R. (3d) 266 (Gen. Div.).

The three constituent elements of the test for civil contempt were summarized by this court in Prescott-Russell Services for Children and Adults v. G.(N.) (2006), 2006 CanLII 81792 (ON CA), 82 O.R. (3d) 686, at para. 27:

The criteria applicable to a contempt of court conclusion are settled law. A three-pronged test is required. First, the order that was breached must state clearly and unequivocally what should and should not be done. Secondly, the party who disobeys the order must do so deliberately and wilfully. Thirdly, the evidence must show contempt beyond a reasonable doubt. Any doubt must clearly be resolved in favour of the person or entity alleged to have breached the order. [Citations omitted.]

See also Hobbs v. Hobbs (2008), 2008 ONCA 598, 54 R.F.L. (6th) 1, at paras. 26-28. In relation to the first of these elements, it must be clear to a party exactly what must be done to be in compliance with the terms of an order: Pro Swing, at para. 24. In relation to the third element, the requirement of proof beyond a reasonable doubt ensures that the potential penal consequences of a finding of contempt are not ordered lightly: Korea Data Systems, at paras. 10-11.

[23] It is also well-settled law that, when interpreting the three-prong test for contempt, a Court Order or injunction must not only be interpreted with regard to “its letter” but also to its “spirit”: Bickford v. The Welland Railway Co., [1870] O.J. No. 272. In Bickford, a steel firm from Buffalo, New York had purchased rails from the Welland Railway Company. Said rails were subject of an injunction preventing the Welland Railway Company from removing the rails without the prior authorization of the Court. The Buffalo steel company attended at the Welland Railway Company lot and took the rails subsequent to the imposition of the injunction. It was accepted that the Welland Railway Company did nothing to assist the Buffalo steel company in the removal of the rails but the Welland Railway Company was aware of the Buffalo steel company’s plans. The Welland Railway Company argued that it was not in contempt of the Order. Mowat V.C. of the Ontario Court of Chancery stated:

It is clear that the Company or its officers did not themselves remove the rails; and it is not proved that they suggested the removal, or knew that it was to take place on the 4th of May. But I am satisfied, from the whole evidence, that, at and after the time of being served with the injunction, they expected Pratt & Co. would send to Port Colborne for the rails on some day; that the Company through its principal officers knew or believed that, without instructions to the contrary, the officers of the Company at Port Colborne would deliver the rails to Pratt & Co., or would allow Pratt & Co. to remove them; that the Company and its officers believed they could prevent the removal if they chose to interfere; that they did not choose to interfere; and that the rails were removed with the knowledge of several of the Company's officers, and without the slightest objection on their part. I am clear that this conduct was a violation of the injunction. An injunction must be obeyed according to its spirit as well as its letter; and a party who is enjoined against removing, destroying, or injuring property in his possession, is not at liberty to stand by, and, without objection, allow others to remove, destroy, or injure the protected property.

The Company or its officers may have taken no active part in the removal of the rails from their possession: [17 Gr Page487] they may have done nothing in the way of actively procuring or assisting in the removal. But they were not at liberty to do nothing, while others were removing from their premises property which the Court had determined that the interests of justice required to be preserved. Had they interfered, their interference might (it is said) have been ineffectual; but they were bound to make the attempt. They acquiesced in the removal because they were willing that the removal should take place, and not because they thought that objection or resistance would have been unavailing.

It was urged that the orders were made improvidently. But I cannot sit in appeal from orders made by the other judges of the Court; and it has long been held, that an injunction must be obeyed whether the party enjoined considers the writ to have been properly granted or not; he must act on it as if properly graded, until and unless he can get it set aside [emphasis added].

[24] The Ontario Court of Appeal has recently affirmed this notion that an Order must be interpreted contextually when determining whether the first prong of the test for contempt has been met. In Boily v. Carleton Condominium Corp. No. 145 2014 ONCA 574, [2014] O.J. No. 3625 (Ont. C.A.), the Court was faced with a situation where the ground level of a condominium building required some repair. A dispute arose over the nature of the ground level repair and a lawsuit was instigated. The motions judge heard a motion by residents asking that the ground level be returned to its original state. The motion was opposed by the condominium board. The motions judge found for the moving party residents and wrote an endorsement ordering the condominium board to “reinstate the Courtyard as it existed after the repairs to the garage”. The motions judge also wrote that “[i]f the parties require supplemental reasons, they are to contact me”.

[25] No Order was entered as a result of the endorsement and, despite the judge’s findings, the condominium board undertook repairs that incorporated some, but not all, of the design features ordered implemented by the motions judge. The moving party residents brought a contempt motion and the motions judge found the condominium board to be in contempt. The board appealed and a majority of the Court of Appeal upheld the finding. The majority stated at paras 54 to 58 and 64 to 71:

For the first part of the test for contempt to be satisfied, the parties must clearly understand what has to be done to comply with the order: Bell ExpressVu Ltd. Partnership v. Torroni, 2009 ONCA 85, 94 O.R. (3d) 614, at para 22.

A review of the jurisprudence reveals that courts tend to find an order unclear on one of three possible bases.

1. The order is missing an essential term about where, when or to whom the order applies.

2. The order employs unclear or overly broad language.

3. The external circumstances obscure the meaning of the order.

See, for example: Laiken v. Carey, 2013 ONCA 530, 367 D.L.R. (4th) 415, at para. 48; Culligan Ltd. v. Fettes, 2010 SKCA 151, 326 D.L.R. (4th) 463, at para. 21.

The Appellants argue before this court, as they did before the motion judge, that the order that they "reinstate the Courtyard as it existed after the repairs to the garage" incorporates unclear language and is therefore ambiguous. The problem was created by the motion judge's use of the words "Courtyard" and "landscaping".

The Appellants contend that their interpretation of the endorsement was reasonable. They interpreted the word "Courtyard" as encompassing just the inner courtyard not the entire Podium, and legitimately believed that the motion judge's reference to "hard landscaping" excluded soft landscaping.

The Appellants further submit that the motion judge himself acknowledged a degree of uncertainty about the clarity of his reasons by suggesting the parties may need to return to him for further elucidation and by resorting to parole evidence to explain his 2011 Endorsement.

I find no merit in this ground of appeal. In my view, by submitting that the 2011 Endorsement is unclear, the Appellants are attempting to do what Lauwers J. refused to allow the contemnor to do in Sweda Farms, quoting from Beaudouin J.A. in Zhang c. Chau, 2003 CanLII 75292 (QC CA), 229 D.L.R. (4th) 298 (Q.C.A.) at para. 32 - to 'hide behind a restrictive and literal interpretation to circumvent the order and make a mockery of it and of the administration of justice."

The only reasonable interpretation of the provision in issue that the Appellants "reinstate the Courtyard as it existed after the repairs to the garage," is that the Appellants were required to restore the Podium landscaping, both hard and soft, to its state prior to the garage repairs. To suggest that the 2011 Endorsement might reasonably be interpreted as limiting the Appellants' restoration obligations to a certain limited part of the exterior of the complex -the courtyard- and to a certain type of landscaping, is, in my view, not supported by the record and not logical.

While interpreting the restoration provision in the context of the 2011 Endorsement as a whole is sufficient to satisfy me that the obligations it imposed on the Appellants are clear and unambiguous, I add the following.

Until the Appellants were advised that the Respondents were bringing a motion for contempt, the Appellants conducted themselves as though they had no difficulty understanding the 2011 Endorsement. As the motion judge noted, the Appellants did not seek clarification of the decision - neither during the subsequent costs hearing nor at any other time, despite his explicit offer that the parties could return to him in the event they had any questions.

Furthermore, when challenged about their deviations from the Original Design, the Appellants' initial response was not to express confusion over what the 2011 Endorsement required of them but to attempt to justify the changes they had authorized.

Finally, in refusing to approve the draft order arising from the 2011 Endorsement, the Appellants did not take the position that the decision was unclear. Rather, they took the position that it was not possible to reinstate the landscape to its appearance prior to the garage repairs.

In any event, it is important to note that even on the basis of the Appellants' narrow interpretation of the 2011 Endorsement, they admit to having authorized work in violation of that decision. I refer to changes that were to hard landscaping inside the Courtyard, such as those made to the traffic circle.

The record supports the motion judge's finding that the Appellants clearly understood the obligations imposed on them by the 2011 Endorsement - to restore the entire exterior, including both hard and soft landscaping, to the Original Design. In his words, in assessing the clarity of his decision arising out of circumstances in which he was involved, he held that the Appellants "knew what they had to do".

The motion judge's interpretation of his own decision is entitled to considerable deference. I see no reason to interfere with the motion judge's conclusion that his 2011 Endorsement was clear and unambiguous.

[emphasis added]

[26] Thus, it is clear that the Ontario Court of Appeal has reaffirmed the contextualized approach for interpreting the clarity of given terms of Orders as per the first prong of the test for contempt. It is not enough for parties or the Court to take a literal interpretation of a given clause in isolation of the factual record. Instead, the Courts must look at the entire record to determine whether or not the impugned term or clause has sufficient clarity such that its breach attracts the quasi-criminal sanctions associated with contempt.

[27] It is also clear that, in prosecuting contempt, parties must adduce affidavit evidence and the court may make a finding of contempt based upon those affidavits. Nonetheless, in situations where there is a dispute with respect to material facts in issue, the court should order a trial of the issue: R. v. B.E.S.T. Plating Shoppe Ltd., 1987 CanLII 4056 (ON CA), [1987] O.J. No. 165 (Ont. C.A.).

[28] Finally, it is no defence to an allegation of ex parte contempt that the parties received legal advice and, acting upon that advice, did not believe that their actions were contemptuous. The provision of incorrect legal advice, and subsequent reliance upon same, does not go to the mens rea of contempt, but goes instead to sentencing: R. v. C.H.B.C. Television, [1999] B.C.J. No. 219 (C.A.); Manitoba (Attorney General) v. Groupe Quebecor Inc., [1987] M.J. No. 306 (C.A.)

ANALYSIS

[29] Counsel for the moving parties made several submissions regarding the history of the matter. For her part, Ms. Aloe-Gunnell (through her counsel) suggests that she has never failed to fulfil the terms of the settlement. In theory, I could go through the areas of disputed evidence but, in the interests of judicial economy, it is clear to me that the issues listed in items 1-5 and 7-8 of the grounds for contempt (as outlined in paragraph 19 of my judgment) require a trial. Simply put, Ms. Aloe-Gunnell has given evidence that either contradicts that of the moving parties or seeks to explain her actions (or inactions) such that I would be required to make determinations of credibility. Such determinations necessitate a hearing with viva voce evidence.

[30] With respect to the commencement of the New York lawsuit (item 6 of the grounds for contempt), however, the key issue involves whether or not Paragraph 11[1], Paragraph 13[2], Paragraph 4[3], and Paragraph 17[4] of Justice Koke’s March 11, 2011 Final Order required Ms. Aloe-Gunnell to seek relief before Justice Koke with respect to all matters dealing with the estate’s automobiles, the Parry Sound property and the Highland Falls property. In my view, Ms. Aloe-Gunnell was so required

[31] As noted above, when determining whether or not a party’s conduct was contemptuous of a Court Order, the clarity of that Order must be assessed given both its letter and spirit. In this instance, there is no doubt that Koke J. seized himself of the matter. In his February 14, 2014 reasons, Koke J. described the lengths that he undertook to deal with the matter. While Paragraph 14 of the Order contains permissive language[5], the mandatory language of Paragraph 17[6] makes clear that Koke J. gave himself exclusive authority over the instant lawsuit. The parties were permitted to come back for directions if necessary but Koke J., and only Koke J., was to sign further Final Orders flowing from the Minutes of Settlement. In commencing the New York lawsuit, Ms. Aloe-Gunnell sought to have a judge other than Koke J. (in a foreign jurisdiction, no less) grant a Final Order regarding matters described in the March 11, 2011 Order (which itself was based upon the Minutes of Settlement). If the parties were permitted to seek relief before a different judge in a different forum, the mandatory language of Paragraph 17 would be rendered meaningless and the full context of the Order would be ignored. Such a result would be entirely inconsistent with the record before me.

[32] The New York Court appears to have agreed with this assertion in so far as it indicated that key components of the New York lawsuit “can only be addressed by the Canadian Court, the Court of origin” and that, as a result, the New York lawsuit was effectively frivolous.

[33] Thus, I am satisfied beyond a reasonable doubt that the first prong of the test for contempt has been made out in so far as Paragraph 17 of Koke J.’s March 11, 2011 Final Order makes clear that Koke J. had – and, until further order, has - exclusive jurisdiction for dealing with any matter that would generate further Final Orders flowing from the Minutes of Settlement (including the Highland Falls property, the Parry Sound property and the “vintage” Jaguar). The commencement of the New York lawsuit thus breached Paragraph 17 as Ms. Aloe-Gunnell sought to have another judge impose just such an Order.

[34] With respect to the second prong of the test for contempt, Ms. Aloe-Gunnell knowingly breached paragraph 17 of Koke J.’s Final Order. Ms. Aloe-Gunnell was clearly aware of the Order. Ms. Aloe-Gunnell intended to commence the New York lawsuit although I accept that she received faulty legal advice. Such an intention satisfies the second prong of the test for contempt.

[35] Finally, I am satisfied of these two findings on the criminal standard – that is, beyond a reasonable doubt. This is not a case where the undisputed facts are open to interpretation. I do not need viva voce evidence to consider whether or not the commencement of New York litigation amounts to contempt – the Order and the public documents filed in New York and Ontario speak for themselves, irrespective of whether Ms. Aloe-Gunnell commenced the New York lawsuit in a specific attempt to thwart settlement.

FINDING

[36] For the foregoing reasons, I find Ms. Aloe-Gunnell in contempt of Koke J.’s March 11, 2011 Order.

Varpio J.

Released: January 12, 2015

CITATION: Aloe-Gunnell v. Aloe et. al, 2015 ONSC 191

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

REASONS FOR DECISION

Varpio J.

Released: January 12, 2015

[1] “Valve Aloe is to choose one remaining motor vehicle, formerly or now belonging to her father and any personal mementos and building materials that remain at the company office and storage building. For these purposes, Val Alo is to be provided with reasonable access.”

[2] “The sale of the rear portion of the Highland Falls property to Scenic Hudson Land Trust, Inc. by way of an Option Agreement and by Contract of Sale when the Option Agreement is exercised is approved by this Court.”

[3] “Any party may ask for further directions from the Court in Sault Ste. Marie.”

[4] “Formal Orders in relation to the Minutes of Settlement will be prepared by the parties and remitted for signature to Justice E.J. Koke.”

[5] “The parties MAY seek direction...”

[6] “Formal Orders in relation to the Minutes of Settlement WILL be prepared by the parties and remitted for signature to Justice E.J. Koke”