Sycor v. Kiaer et al, 2015 ONSC 734

COURT FILE NO.: 04-CV-264018 CM2

DATE: 20150202

SUPERIOR COURT OF JUSTICE – ONTARIO

COMMERCIAL LIST

RE: SYCOR TECHNOLOGY INCORPORATED

Plaintiff

AND:

JOHN KIAER, DUANE ASTRAUSKAS, PHOENIX/EDT INC., PHOENIX/EDT, A SOLE PROPRIETORSHIP CARRIED ON BY DUANE ASTRAUSKAS and PHOENIX/PMA INC.

Defendants

BEFORE: Newbould J.

COUNSEL: Charles F. Scott and Andrew J. Winton, for the plaintiff

Milton A. Davis and Robert B. Macdonald, for the defendant John Kiaer

Michael R. Kestenberg, Thomas M. Slahta and Gerard Borean, for the Astrauskas defendants

ENDORSEMENT

[1] On October 27, 2014 I held that the defendant John Kiaer had knowingly assisted in a cover-up of the truth. In particular I held:

[50] While technically the sales invoices were the property of Phoenix to produce, what Mr. Kiaer did was knowingly assist in a cover-up of the truth by failing to ensure that the sales invoices were produced as required by the orders of Morawetz J. and in permitting his lawyer Ms. Willson to write the letter of February 13, 2013 that he had to know was not truthful or not afterwards requiring her to write a correcting letter telling the whole truth. I find that this has been established beyond a reasonable doubt.

[51] Whether this conduct could be considered to be in contempt of court was not argued. Counsel may file brief written argument on this question.

[2] I have now had submissions made on the issue of whether Mr. Kiaer’s conduct could be considered to be in contempt of court.

[3] Mr. Davis on behalf of Mr. Kiaer says that knowing assistance is a separate cause of action in which there is a trust, and as there is no trust issue in this case, he assumes that I have invited submissions as to whether Mr. Kiaer has aided and abetted in the disobedience of the court order of Morawetz J. He concedes that a court may hold a party in contempt of court for aiding and abetting a contempt of court.

[4] In United Food and Commercial Workers International Union Locals 175 and 633 v. Rainy Lake Hotel, 2005 34817 Smith J. stated that a party can be found guilty of contempt for aiding and abetting a breach of a court order and adopted from Seaward v. Paterson, [1897] 1 CH 545, approved in Poje v. British Columbia (Attorney General), 1953 34 (SCC), 1953 2 D.L.R. 785 (SCC), the following statement:

He is bound, like other members of the public, not to interfere with, and not to obstruct, the course of justice; and the case, if any, made against him must be this—not that he has technically infringed the injunction, which was not granted against him in any sense of the word, but that the has been aiding and abetting others in setting the Court at defiance, and deliberately treating the order of the Court as unworthy of notice.

[5] Mr. Davis in his factum says that Mr. Kiaer “through counsel, regrets and unreservedly apologizes to the Court for any conduct this Court has seen as amounting to a cover-up of the truth”. Mr. Davis states in his factum that Mr. Kiaer “never intended or intends to flout or disobey any Court order. He affirms his respect for the process and authority of this Court.”

[6] Mr. Kiaer has not sworn any affidavit to state these things. In any event, an intention to disobey or flout a court order is not required to prove contempt. See the reference to In Sabourin and Sun Group of Companies v. Laiken, 2013 ONCA 530 per Sharpe J.A. at para. 7 of my endorsement of October 27, 2014.

[7] So far as an apology is concerned, even had it come directly from Mr. Kiaer, that would not be a defence but rather a matter for the penalty phase of the contempt application.

[8] It is also argued on his behalf that any wrongful conduct by his previous solicitor should not be visited on him. It is said that unusually for a contempt motion, no affidavit was filed by Mr. Kiaer and that this fact must be considered in the context of his lawyer at the time having a conflict of interest in purporting to speak not only on his behalf but also on behalf of all defendants in some instances despite the fact that the interests of the defendants were not always aligned. It is said that the absence of an affidavit from Mr. Kiaer had the effect of denying the Court the full factual matrix for the conduct in issue.

[9] Mr. Davis contends that Mr. Kiaer would not only “have had to refuse to follow the actions and (presumably) advice of Ms. Willson”, but also gone over her head or somehow oblige Ms. Willson to reverse her actions. There is a problem with this argument. There is no affidavit evidence before me as to why Mr. Kiaer did not file an affidavit, or what advice he may have had regarding that. It is Mr. Kiaer’s right not to file an affidavit to establish these things, but in the absence of an affidavit I cannot make any finding that it was the fault of someone other than Mr. Kiaer that he did not file an affidavit on the return of the contempt motion.

[10] Another problem is that I made specific findings of fact regarding Mr. Kiaer. What is being requested is that I revisit my findings regarding him based on unsworn assertions. If he had filed an affidavit to support this request, he of course would have been subject to cross-examination on it. Without that I cannot re-open my findings. Presumably it was a tactical decision not to file an affidavit at this stage.

[11] In Church of Scientology v. Cooper, [1984] O.J. No. 590, a case involving an alleged criminal contempt of court, Cromarty J. adopted the following statement from R. v. Mammolita et al. (1984), 1983 3563 (ON CA), 9 C.C.C. (3d) 85 as the test for aiding and abetting the contempt:

In order to incur liability as an aider or abettor:

(i) there must be an act or omission of assistance or encouragement;

(ii) the act must be done or the omission take place with the knowledge that the crime will be or is being committed;

(iii) the act must be done or the omission take place for the purpose (ie. with the intention) of assisting or encouraging the perpetrator in the commission of the crime.

[12] Assuming that test applies to a civil contempt, with the modification of removing reference to a crime, in my view the test has been met. My findings against Mr. Kiaer establish he knowingly assisted a cover-up by his omissions to ensure proper production of sales invoices by his co-defendants that he knew existed.

[13] I therefore hold Mr. Kiaer in contempt of court. A hearing to consider the appropriate relief for contempt should now be scheduled.

Newbould J.

Date: February 2, 2015