ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: CV-14-2724-00
DATE: 20150921
B E T W E E N:
GURMUK SINGH HUNJAN, AJAIB SINGH SIDHU, GURMEET SINGH, LAKHVIR SINGH DHALIWAL, ANMOL SINGH LOTA, BALBIR SINGH DHALIWAL, GURSHARAN SINGH SIDHU, SATPAL SINGH DHALIWAL, GURCHARN SINGH RAHEL, SATWANT KAILA, SUKHDEV SINGH, GURJEET SINGH DHALIWAL, SADHU SINGH HUNJAN, TAJINDER SINGH BHOGAL, SUKHWINDER SINGH, GURCHARN SINGH SOHAL, DARSHAN SINGH, JASWINDER FLORA, SANTOKH SINGH BHAMBER AND TEJINDER SINGH KALRA
Pavel Malysheuski, for the Applicants
Applicants
- and -
RAGHBIR SINGH, SUNIL AHUJA, NANAKSAR SATSANG SABHA OF ONTARIO, AND TEJPAL SAHNI also known as TEJPAL SAINI
Joseph Irving, for the individual Respondents
David Keith for Nanaksar Satsang Sabha of Ontario
Respondents
HEARD: August 20, 2015
REASONS FOR DECISION – CONTEMPT OF COURT
Sproat, J.
INTRODUCTION
[1] This is a motion to find Raghbir Singh, Sunil Ahuja and Tejpal Sahni (“the Respondents”) in contempt of court and for a remedial and penal order. I will not repeat all of the background which is set out in my prior reasons in Nanaksar Satsang Sabha of Ontario 2014 ONSC 7377 and Hunjan v. Singh 2015 ONSC 595.
[2] Nanaksar Satsang Sabha of Ontario (“the Corporation”) is incorporated under the Corporations Act. Litigation ensued over governance of the Corporation. The Respondents were the directors of the Corporation prior to November 25, 2014. O’Connor J. mediated the dispute and the Respondents were represented by counsel in that process. On November 25, 2014 O’Connor J. made an order on consent stating that the Board of Directors of the Corporation:
...shall be comprised of three directors and that Dedar Singh, Lakhvir Dhaliwal and Rajinder Singh Sahota are the Directors.
[3] It was, therefore, crystal clear to the Respondents that as of November 25, 2014 they were no longer directors of the Corporation. The Respondents, however, resisted relinquishing control. In the period November 26, 2014 to December 29, 2014 the Respondent Sahni signed cheques, or other banking documents, as a Director authorizing approximately $135,000 to be paid out of the Corporation. Of this amount $5695 was paid out after my December 22, 2014 order which specifically enjoined the Respondents from removing any funds from the Corporation. Mr. Sahni filed an affidavit of March 4, 2015 which he stated was made with the concurrence of the other Respondents.
[4] Mr. Irving confirmed that he had taken instructions from all of the Respondents and that if any order was made it should be against all three as they acted in concert and agreement in having the funds paid out.
[5] Mr. Irving advised that the Respondents did not seek to cross-examine the deponents of the affidavits relied upon by the Applicants or to testify in court. Similarly the Applicants agreed the contempt hearing should proceed on the materials filed.
[6] The vast majority of the amounts paid out were paid to law firms including $90,000 to Simmons da Silva LLP (which at one time represented the Corporation but as of the proceedings before O’Connor J. represented the Respondents) and $10,000 to Blumberg Segal LLP (which never represented the Corporation but did represent a proposed intervenor who supported the Respondents).
[7] The affidavit of Tejpal Sahni states that the Respondents were advised by Ray Thapar of Simmons da Silva that they continued as directors because O’Connor J. had not specified the date the new directors took office and, as such the payments made were proper. Mr. Sahni was not cross-examined. There is additional support for the fact that Mr. Thapar was giving advice along these lines as he emailed the Royal Bank threatening to sue it if the signing authorities recognized by the bank were changed and advanced the position that the Respondents continued as directors notwithstanding the order of O’Connor J.
[8] In Les Services aux Enfants et Adultes de Prescott-Russell v. N.G. et al. 2006 81792 (ON CA), [2006] O.J. No. 2488 (C.A.) Blair J.A. stated:
- The criteria which apply to a finding of guilt of contempt of court are well established. A three-part test has to be met. Firstly, the order which has not been complied with must clearly and unequivocally set forth what must be done or not done. Secondly, the party who disobeys the order must have done so in a deliberate and voluntary manner. Thirdly, the evidence must establish contempt beyond a reasonable doubt. It is clear than any doubt must be resolved in favour of the person or the entity alleged to have violated the order [citations omitted].
[9] I appreciate that the order of O’Connor J. did not state expressly that the Respondents must do or refrain from doing something. The order was, however, made in the context of a fight for control of the Corporation. The Respondents were involved in that process and knew they were no longer directors. They defied that order by acting as directors as exemplified by Mr. Saini signing cheques and other banking documents. That defiance continued even after my express December 22, 2014 order.
[10] I am also in agreement with the observation by N. Smith J. in S. (G.) v. S. (L.) 2013 13 CSC 1725 that:
- A court order must be obeyed until and unless it is reversed: Larkin v. Glase, 2009 BCCA 321 (B.C.C.A.) [Larkin]. All that is necessary to establish contempt of court is proof of deliberate conduct that has the effect of contravening the order, an intent to bring the court into disrepute or to interfere with the due course of justice or with the lawful process of the court is not an essential element of civil contempt: Larkin; Topgro Greenhouses Ltd. v. Houweling, 2003 BCCA 355 (B.C.C.A.).
[11] Further, as stated by O’leary J. in Canada Metal Co. v. Canadian Broadcasting Corp. (No. 2) 1974 835 (ON SC), [1974] O.J. No. 1999 (Ont. S.C.J.):
- Neither is it a defence to contempt proceedings that the things done were done reasonably and despite all due care and attention, in the belief based on legal advice that they were not breaches: Re Tyre Manufacturers' Agreement, [1966] 2 All E.R. 849 at p. 862.
[12] The Respondents were well aware from the order of O’Connor J. that as of November 25, 2014 they were no longer directors of the Corporation yet they continued to act as directors by authorizing major disbursements. I am easily satisfied beyond a reasonable doubt that the court order was clear and that they deliberately violated it.
[13] I have wrestled with the appropriate remedial order. The Applicants ask for an order that the Respondents restore $135,000 to the Corporation. If I made that order it would only be fair to make it without prejudice to the Respondent’s position that certain of the funds were in fact owed by the Corporation and should be paid by it and that the law firms are liable to disgorge some or all of the money they received. In other words further litigation would be inevitable.
[14] Mr. Keith indicated he has instructions to commence an action by the Corporation against the Respondents. Mr. Irving indicated he had instructions to claim over against Simmons da Silva LLP.While not addressed by Mr. Keith specifically, the position of the Corporation is that other payments such as to Blumberg Segal LLP were improper as no services were rendered to the Corporation.
[15] I cannot apportion blame and responsibility among all those who may be responsible. I can only make an order against the Respondents. An order solely against them is a blunt instrument. In my view relatively little would be accomplished by an order that the Respondent restore $135,000 to the Corporation. While no evidence was filed Mr. Irving’s position certainly is the Respondents don’t have the money to write a cheque as he was urging the Respondents be able to pay a prior costs order at $5,000 per month. Further, litigation will be necessary in any event to sort out who is responsible for what. The Respondents Singh and Ahuja reside in the United States so enforcement of an order to pay $135,000 against them is problematic. The law firms (or their insurers) have deep pockets so no order is required to preserve an asset that may disappear. Finally, whatever their faults, the Respondents were unpaid directors.
[16] There should, however, be a penalty imposed on the Respondents for their contempt of court. Mr. Malysheuski suggested 10% to 15% of the amount improperly paid out. Mr. Irving suggested that given the Respondents acted on legal advice, there should be no penalty.
[17] In my opinion there should be a penalty. The contempt of court is clear. The contempt continued even after my December 22, 2014 order made clear that the Respondents had no authority to disburse funds on behalf of the corporation. While serving as an unpaid director, the Respondents had a financial interest in the payments made as to some significant extent the Corporation paid Simmons da Silva LLP for service rendered to the Respondents. The Respondents have not accepted any responsibility or expressed any contrition. In fact none of the Respondents filed any evidence or bothered to attend the contempt hearing.
[18] In my opinion a penalty of $5,000 payable by each of the Respondents is appropriate and that amount shall be paid to the Treasurer of Ontario within 60 days failing which any Respondent in default of payment is sentenced to 14 days incarceration in a provincial institution.
[19] I have reviewed costs submissions by the parties. The Applicants seek costs of $20,743 on a substantial indemnity basis. The Corporation seeks costs of $1,856 on a substantial indemnity basis. The Applicant’s costs submissions, and in particular the Reply submissions satisfy me that the time spent is reasonable and relates to the contempt proceeding. The hourly rates claimed are reasonable. This was a matter of significant importance and some complexity.
[20] The proceedings were necessitated and protracted by the unlawful conduct of the Respondents. I do not accept that the Respondents were motivated by the best interests of the Corporation. They were motivated to a significant extent by their personal interest in having their legal fees paid. The Applicants were generally successful although for some practical – logistical reasons I did not order the Respondents to repay the money although there was considerable merit to that request.
[21] As such I order that the Respondents are jointly and severally liable to pay costs on a substantial indemnity basis as follows:
(a) of $20,000 to the Applicants; and
(b) of $1,850 to the Corporation.
Sproat, J.
Released: September 21, 2015
COURT FILE NO.: CV-14-2724-00
DATE: 20150921
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
GURMUK SINGH HUNJAN, AJAIB SINGH SIDHU, GURMEET SINGH, LAKHVIR SINGH DHALIWAL, ANMOL SINGH LOTA, BALBIR SINGH DHALIWAL, GURSHARAN SINGH SIDHU, SATPAL SINGH DHALIWAL, GURCHARN SINGH RAHEL, SATWANT KAILA, SUKHDEV SINGH, GURJEET SINGH DHALIWAL, SADHU SINGH HUNJAN, TAJINDER SINGH BHOGAL, SUKHWINDER SINGH, GURCHARN SINGH SOHAL, DARSHAN SINGH, JASWINDER FLORA, SANTOKH SINGH BHAMBER AND TEJINDER SINGH KALRA
P. Malysheuski, for the Applicants
- and –
RAGHBIR SINGH, SUNIL AHUJA, NANAKSAR SATSANG SABHA OF ONTARIO, AND TEJPAL SAHNI ALSO KNOWN AS TEJPAL SAINI
J. Irving, for the individual Respondents,
David Keith for the Nanaksar Satsang Sabha of Ontario
REASONS FOR JUDGMENT
Sproat, J.
Released: September 21, 2015