Oesterlund v. Pursglove, 2015 ONSC 6145

CITATION: Oesterlund v. Pursglove, 2015 ONSC 6145 COURT FILE NO.: FS-14-393403 DATE: 2015-10-02

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Applicant, Robert Simon Oesterlund AND: Respondent, Sarah Louise Pursglove AND: Added Respondents, RSOP Holdings, LLC; RSOP Holdings Delaware, LLC; Xacti, LLC; Sunshine Ally, LLC; Crawler, LLC; Crawler Group, LLC; Smartsavingscenter.com, LLC; Smart Savings Center, LLC; Integrated Mail Marketing Services, LLC; RSO Holdings, Ltd.; OP Property Investments, LLC; Valion Holdings, LLC; Omega Partners Limited; Omega Partners Finland, LLC; M/Y Déjà Vu Ltd.; Extreme Crafts, LLC; Extreme Crafts III, LLC; Extreme Crafts VI, LLC; Extreme Crafts VII, LLC; Extreme Crafts VIII, LLC; Global Jets Leasing, LLC; G7 Designs, Inc. (also known as Capital Investment Group); DV3, LLC; Xacti CZ, s.r.o.; Integrity North, Ltd.; Integrity Yachts, Ltd.; Midnight Sun Ventures, Ltd.; Omega Capital Properties Inc.; Capital Investment Holdings, LLC; Preferred Property Properties, LLC; Preferred Property Holdings Georgia, LLC; Inbox International, LLC; Omega Partners, OU; 4S Holdings Group, Inc.; the 2013 Paradise Investment Trust; the Forbes Hare Trust Company Limited; Valion Group, LLC; Omega Partners Finland II, LLC; 2013 Integrity Business Holdings Trust; Integrity Liquidity Holdings, LLC; Integrity Investment Holdings, LLC; and Paradise Investment Holdings LLC

BEFORE: CHIAPPETTA, J.

COUNSEL: G. Karahotzitis and P. Schmidt, for the Applicant D. Gelgoot, J. Liew, for the Respondent R. Centa, Z. Paliare for the Added Respondents G7 Designs, Inc.

HEARD: October 1, 2015

ENDORSEMENT

Overview

[1] The Respondent served a Notice of Motion dated August 26, 2015 seeking in part an Order striking the Applicant’s pleadings and denying him an audience before this Court on the basis of alleged breaches of Court Orders as stated therein (“Motion to Strike”). The Respondent served a Notice of Contempt Motion dated September 3, 2015 seeking an Order to find the Applicant in contempt of court on the basis of alleged breaches of Court Orders as stated therein (“Contempt Motion”). On consent, the Contempt Motion is to proceed by viva voce evidence; as a trial of an issue.

[2] The Applicant served a Notice of Motion dated September 21, 2015 seeking in part that the Motion to Strike be heard together with the Contempt Motion. In the alternative, the Applicant seeks an Order that the Respondent’s Motion to Strike be stayed pending the completion of the trial of the Respondent’s Contempt Motion.

[3] The Respondent requests that the Motion to Strike be heard first and that the Contempt Motion be adjourned pending the disposition of the Motion to Strike.

[4] The Respondent has brought two motions, therefore, seeking Court imposed consequences for the Applicant’s alleged breaches of Court Orders. The issue before the Court is the proper sequence and conduct of the motions.

Analysis

[5] Both the Motion to Strike and the Contempt Motion ask the Court to impose sanctions for the Applicant’s alleged failure to comply with Paragraphs 1(a), (b), (c), (d) of Justice Greer’s Order dated May 1, 2014 and paragraph 15 of Justice Czutrin’s Order dated July 4, 2014. The Motion to Strike relies on the alleged breach of further Court Orders not included as grounds for the Contempt Motion. The Respondent swore separate affidavits in support of the respective motions. Both affidavits are 41 pages long and both have 108 exhibits. I agree with the submission of counsel for the Applicant that there is a significant duplication of evidence relied upon by the Respondent in her affidavit sworn September 2, 2015 in support of the Contempt Motion and relied upon by her in her affidavit sworn August 26, 2015 sworn in support of the Motion to Strike. I further agree that a comparison of the Respondent’s respective affidavits demonstrates that most of the paragraphs are identical or essentially identical to each other. Counsel for the Respondent conceded to the Court that there is “no doubt” that the transactions at issue in both motions are “substantially similar”.

[6] While both motions ask the Court to impose sanctions on the Applicant for his alleged noncompliance as set out therein, the conduct and procedure of the motions is decidedly different. The Motion to Strike is a civil motion wherein the standard of proof to establish a breach of a Court Order warranting sanction is one of a balance of probabilities. The Contempt Motion is a quasi-criminal motion wherein the Applicant faces potential incarceration. It is well settled law that establishing civil contempt requires proof beyond a reasonable doubt of an intentional act or omission that is in fact in breach of a clear order of which the alleged contemnor has notice (Carey v. Laiken, 2015 SCC 17, 2015 CarswellOnt 5237 (S.C.C.) at para. 38). It is for these reasons that motions for contempt are often said to be strictissimi juris, ie. that all proper procedures must be strictly complied with (Bell Express Vu Ltd. Partnership v. Torroni, 2009 ONCA 85, 2009 CarswellOnt 416 (Ont. C.A.) at para. 20).

[7] Justice Gordon set out the proper procedural protections afforded to a party faced with civil contempt at paras. 3 of Vale Inco Ltd. V. U.S.W., Local 6500, 2010 ONSC 3039, 2010 CarswellOnt 3452 (Ont. Sup. Ct.) :

1. The right to be provided with particularized allegations of the contempt;

2. The right to a hearing;

3. The right to be presumed innocent until such time as guilt is proven beyond a reasonable doubt;

4. The right to make full answer and defence, including the right to retain and instruct counsel, the right to cross-examine witnesses and the right to submit or call evidence;

5. The right not to be compelled to testify at the hearing.

[8] The right not to be compelled to testify at the hearing is also consistent with s.7 of the Canadian Charter of Rights and Freedoms, Part I of the Constitution Act, 1982, being Schedule B to the Canada Act 1982 (U.K.), 1982, c. 11 (“the Charter”). Section 7 of the Charter provides that a person shall not be deprived of his liberty except in accordance with the principles of fundamental justice. The principles of fundamental justice protect the right against self-incrimination (Videotron Ltee v. Industries Microlec produits electroniques Inc., 1992 29 (SCC), 1992 CarswellQue 125, [1992] 2 S.C.R. 1065 (S.C.C.) at para. 24).

[9] On September 4, 2015, the day after the Contempt Motion was served, counsel for the Applicant advised the Court and counsel for the Respondent that the Applicant elected to have a trial of the Contempt Motion with viva voce evidence. Counsel for the Applicant also advised that the Applicant intended to invoke his rights and protections afforded to him by law and under the Charter for the purposes of the trial, including but not limited to the right to make full answer and defence and the right not to be compelled to testify at the hearing. As set out in Justice Goodman’s Endorsement dated September 16, 2014, on consent, the contempt hearing is to proceed by viva vice evidence and therefore will proceed as a trial of an issue.

[10] The Applicant submits that to ensure his procedural fairness on the Contempt Motion, he must not be compelled to respond to the Motion to Strike. Rather, the Motion to Strike must be tried together with and heard with the Contempt Motion or be stayed pending the disposition of the Contempt Motion. Given that the evidence relied upon in both motions is identical or substantially identical, it is the Applicant’s position that if he is required to respond to the Respondent’s allegations in furtherance of her Motion to Strike prior to the disposition of the Contempt Motion, it would in effect constitute a waiver of his right against self-incrimination and a waiver of his right not to be compelled to testify at the hearing of the Contempt Motion.

[11] The Respondent disagrees. The Respondent submits that the Applicant ought to be compelled to respond to the allegations as set out in her affidavit in support of her Motion to Strike prior to the disposition of the Contempt Motion. The Applicant’s use of a Charter argument, it is submitted, is to avoid responding to the Motion to Strike and it should be rejected. The Respondent relies in part upon the decision of Justice Perell in ACI Brands Inc. v. POW, 2014 ONSC 2784, 2014 CarswellOnt 5900 (Ont. S.C.J.) wherein Justice Perell found that unlike criminal proceedings, in which an accused has a right not to be compelled to give evidence, in civil proceedings parties are compellable and thus can be compelled to give evidence against their will (at para. 92).

[12] As noted by Justice Perell, at para.93, a party’s attendance at an examination for discovery is compulsory, and the case law establishes that a person examined at a civil trial or an affiant in civil proceedings is treated as a compelled witness. It remains within the Applicant’s discretion, however, not to serve and file evidence in response to the Motion to Strike. An affidavit sworn by the Applicant in response to the Motion to Strike is not directly compellable. Given the substance of the allegations, however, the Applicant’s failure to be an affiant in response is more likely to lead to the Respondent’s success on the motion. Once an affiant in response to the Motion to Strike, the Applicant is a compellable witness and subject to questioning; including cross-examination.

[13] By serving the Motion to Strike 8 days prior to the Contempt Motion, the Respondent has put the Applicant in “a rock and a hard place” position. The allegations in the Motion to Strike require a response by the Applicant as affiant, failing which the Respondent is more likely to be successful. The moment he is an affiant in response to the Motion to Strike, he is subject to cross-examination and compellable testimony. As the grounds and evidence for the Contempt Motion are identical or substantially similar to that of the Motion to Strike, by responding to questioning and cross examination as an affiant on the Motion to Strike, the Applicant is effectively testifying in response to the allegations in support of the Contempt Motion. If the Court permits the hearing of the Motion to Strike in advance of the Contempt Motion, as it was served, therefore, it is indirectly and effectively compelling the Applicant to testify to the grounds and evidence relied upon on the Contempt Motion, contrary to the principles of fundamental justice as demonstrated by the procedural protections that must be afforded to a party faced with civil contempt.

[14] The Respondent submits that there are two means by which the Court can hear the Motion to Strike prior to the Contempt Motion and respect the Applicant’s right not to testify on the Contempt Motion. She relies upon s.13 of the Charter which serves to protect an individual from having compelled incriminating testimony used directly against him in any other proceedings. The case law relied upon by the Respondent to support her submission is restricted to the use of s.13 protection in subsequent proceedings. The Court was provided with no precedent demonstrating that s.13 protection is available to the Respondent who is facing civil contempt and a companion motion on the same grounds and substantially similar evidence in the same civil proceeding, to be heard by the same Judge. Its use in this context is contrary to the clear language of the section and contrary to its application as set out in the case law submitted to the Court on this motion.

[15] Further, counsel for the Respondent submits that the Court could ensure the Applicant’s protection against self- incrimination by excluding the Applicant’s affidavit in response to the Motion to Strike from the evidentiary record on the Contempt Motion. In my view, this suggestion is blind to the unmitigated obligation to ensure procedural fairness on the Contempt Motion. Further, having opportunity to review the Applicant’s affidavit in response to the allegations upon which the Contempt Motion is also made and cross examining the Applicant on the affidavit would surely assist the Respondent and her counsel in the preparation of their case against him on the Contempt Motion, thereby compromising the Applicant’s right to a fair hearing.

[16] The Respondent further submits that the Motion to Strike should proceed first as it would be less cumbersome, complex and expensive than a viva voce trial. She argues that, by this motion, the Applicant is attempting to avoid and defer his obligations to respond to the Motion to Strike. The problem with the Respondent’s position however is that the moment she decided to serve and file a Motion for Contempt relying on included grounds and evidence identical or essentially identical to the earlier served Motion to Strike, she triggered to the Applicant’s right not to testify or self-incriminate with respect to those allegations. It is a right that is afforded the utmost protection. For reasons set out above, it is a right, in this context, that will be eviscerated should the Motion to Strike proceed prior to the disposition of the Motion to Contempt.

[17] The Applicant asks the Court for an Order that the Motion to Strike be heard together with the trial of the Contempt Motion by way of viva voce evidence and that the Applicant not be compelled to deliver an affidavit in response to the Respondent’s affidavits sworn August 26, 2015 and September 2, 2015. In my view, this is not appropriate. The Applicant is not afforded the same procedural protections as a responding party to the Motion to Strike as he is as a party facing a civil contempt. He should not be afforded such protections on the Motion to Strike simply because the Respondent brought both motions 8 days apart relying on similar grounds and substantially similar evidence. Rather, the Motion to Strike should proceed in the normal course as a motion for sanctions other than a contempt order in accordance with Rule 1 (8) (c), (e), 1(8.1), 1 (8.2), and 1(8.4) of the Family Law Rules, O. Reg. 114/99.

[18] The Applicant cannot properly respond to the Motion to Strike by affidavit without subjecting himself to testimony on the allegations in support of the Contempt Motion. I am satisfied that the Applicant’s right not to testify on the Contempt Motion would be violated if he were to respond to the Motion to Strike. This is an exceptional and extraordinary case in significant part because of the timing and similarities of the Respondent’s 2 motions in the same proceeding. There are no means available to provide the Applicant his entitled protection against self-incrimination or the right to testify on the Contempt Motion. In my view, therefore, the Applicant’s right to a fair trial of the Contempt Motion would be prejudiced by the progress of the Motion to Strike. The Applicant’s request in the alternative for an Order that the Respondent’s Motion to Strike be stayed pending the completion of the trial of the Contempt Motion is therefore granted (Courts of Justice Act, R.S.O. 1990, c. C.43, s.106; ACI Brands Inc. v. Pow, at para. 72).

Order to go:

1. In accordance with the Courts of Justice Act, R.S.O. 1990, c. C.43, s.106, the Respondent’s Notice of Motion dated August 26, 2015 for an Order striking the Applicant’s pleadings and an Order that the Applicant be denied an audience in the Court due to alleged non-compliance with Court Orders is stayed pending either the withdrawal by the Respondent of her Notice of Contempt Motion dated September 3, 2015 or the release of my Reasons For Judgment upon the completion of the trial of the Respondent’s Notice of Contempt Motion dated September 3, 2015, whichever occurs first.

2. Should the Respondent not withdraw her Notice of Contempt Motion dated September 2, 2015, the trial shall take place before me on or before January 31, 2016. The parties shall schedule a trial management conference before Justice Goodman wherein, subject to Her Honour’s discretion, a trial date shall be set and a timetable agreed to with respect to disclosure, witness lists and will say statements, pre-trial motions ect., prior to the scheduled trial date.

3. On consent, costs of this motion shall be reserved to be dealt with during the trial of the Respondent’s Notice of Contempt Motion dated September 3, 2015.

CHIAPPETTA J.

Date: October 2, 2015