Court File and Parties

COURT FILE NO.: 810/10 (Guelph) DATE: 2016-05-09 SUPERIOR COURT OF JUSTICE – ONTARIO

RE: BARBARA ANN BLATHERWICK, Applicant AND: BRIAN EARL BLATHERWICK, Defendants

BEFORE: Ricchetti, J.

COUNSEL: J. Cox for the Applicant D. I. Kilgour for the Respondent

HEARD: April 19, 2016

Endorsement

MRS. BLATHERWICK CONTEMPT MOTIONS

The Motions

[1] Mrs. Blatherwick brings this motion seeking a declaration that Mr. Blatherwick is in contempt of this court's judgment dated April 27, 2015 ("Judgment") for:

a) failing to “cash in” his Mauritius Orangefield Insurance Policy (the “Policy”) within 30 days and pay the money to Mrs. Blatherwick; and

b) transferring control of Seasons Limited - Macau Commercial Offshore (“Seasons Macao”);

[2] Mrs. Blatherwick also seeks a declaration that Mr. Blatherwick failed to make the payments ordered by the Judgment to Mrs. Blatherwick.

The Judgment

[3] I will not repeat the facts set out in the Judgment.

[4] Mr. Blatherwick has not appealed the Judgment, sought a stay of the Judgment or brought a motion to vary the terms of the Judgment. The Judgment remains in full force and effect.

[5] Mr. Blatherwick has not paid in excess of $10,000,000 to Ms. Blatherwick for equalization and lump sum spousal support under the Judgment.

The Evidence at the Contempt Motion

[6] Mrs. Blatherwick and Mr. Blatherwick filed affidavits on this motion. Both parties were given an opportunity to cross-examine on the affidavits during a viva voce hearing.

[7] Mrs. Blatherwick was not cross-examined on her affidavit. Mr. Blatherwick was cross-examined on his affidavit.

The Position of Mr. Blatherwick

Mauritius Orangefield Life Insurance Policy

[8] There is no dispute that Mr. Blatherwick has not "cashed in" the Policy.

[9] Mr. Blatherwick submits that he does not have the authority or ability to "cash in" the Policy and, as such, there was no "wilful disobedience" of the Judgment.

Seasons Limited - Macau Commercial Offshore

[10] There is no dispute that Mr. Blatherwick no longer has control of Seasons Macau. It is admitted that Seasons Macao was previously controlled by Mr. Blatherwick and is now controlled by Messrs. Gravelle and Williams.

[11] Mr. Blatherwick submits that, since he was unable to travel to the shareholder's meeting and he could not prevent the transfer of control by Mr. Gravelle and Mr. Williams to themselves. Mr. Blatherwick submits he took no active steps to transfer control of Seasons Macao and, therefore, he did not breach the term of the Judgment.

Declarations of Failure to Pay Amounts set out in the Judgment

[12] Mr. Blatherwick submits he receives little money from Seasons Macau and is not able to pay Mrs. Blatherwick in accordance with the terms of the Judgment. Mr. Blatherwick submits that there is no reason for the court to make the declarations requested.

Mr. Blatherwick's Credibility

[13] One would have hoped that, after the very clear, unfavourable credibility findings against Mr. Blatherwick at trial for the reasons set out in the Judgment, he would have been more truthful and accurate regarding the current matters before this court. Unfortunately, that was not the case. Mr. Blatherwick continues to do and say whatever he believes is in his best interests, regardless of whether it is true or not, even when under oath.

[14] Let me briefly set out some of the evidence at the contempt hearing which raises further serious credibility issues regarding Mr. Blatherwick’s evidence:

a) Mr. Blatherwick and his “partners” in Seasons Halloween Business were “not happy” with the Judgment. They were particularly unhappy that they had to move their business out of the 17 Brownridge Road Property because the said property was transferred to Mrs. Blatherwick. The Seasons Halloween Business had to find and move into another building in Ontario. Mr. Blatherwick carries on his business from the new location. Despite this, the Seasons Halloween Business had record sales of approximately $48,000,000 USD in 2015. Approximately 40 -50% of these sales are through Seasons Macau, the company of which Mr. Blatherwick admits he is the 50% shareholder. Yet, Mr. Blatherwick testifies he only receives a small income in Canada. Mr. Blatherwick does not know if there have been any dividends paid out from Seasons Macau. It is difficult to accept that Mr. Blatherwick would receive a low income and have such little financial information concerning his interest in a very valuable company, Seasons Macao, of which he is the 50% shareholder. I do not accept Mr. Blatherwick's evidence regarding his income or knowledge of Seasons Macao's financial information;

b) On June 1, 2015 Mr. Blatherwick confirmed in a letter to Mrs. Blatherwick's counsel that "I have no cash now at all ". On June 18, 2015 Mr. Blatherwick confirmed in writing to Mrs. Blatherwick's counsel that he had no assets valued at over $500. During approximately the same period of time, Mrs. Blatherwick was receiving no spousal support of $2,000 a month through garnishment proceedings. Yet, just like at trial, Mr. Blatherwick continued to send money and gifts to his fiancée, previous fiancée and girlfriends in the Philippines:

• Vanessa Sagmit $500 in July and August 2015;
• Izzah Reyes $1000 and a further three amounts of $500 each over the next few months;
• Desiree Domingo - a new Iphone6 (approximately $1,200). After Ms. Domingo put a photograph of the gift on her Facebook, on June 10, 2015, Mr. Blatherwick asked her to remove it because " the lawyer is still after me for money " and he “ did not want the judge or the lawyer (Mr. Cox) to see that he had given her a gift ";

I conclude that Mr. Blatherwick continues to be untruthful about his finances and that Mr. Blatherwick has access to more monies than he is prepared to admit, even under oath;

c) During the trial, Mr. Blatherwick denied that he had any authority (and had not had authority for some time) over the transfer monies in Discovery Bay, an offshore holding company where substantial amounts of money from the Seasons Halloween Business had moved in and out of at the instructions of Mr. Blatherwick. The details of Discovery Bay and its financial information were never forthcoming from Mr. Blatherwick at trial. Mr. Blatherwick was asked at this hearing under oath whether he had transferred funds in Discovery Bay in January 2016. Mr. Blatherwick denied he had. Then, Mr. Blatherwick was confronted with a portion of an email dated January 18, 2016 from him to the Discovery Bay’s accountants stating: " Good Morning Anna; Please see my attached request for money transfer's to Discovery Bay. Regards. Brian Blatherwick" . The rest of the email was not produced by Mr. Blatherwick. What occurred afterwards was indicative of Mr. Blatherwick's total disregard for the truth, his oath, this court's authority and the Judgment. At first, Mr. Blatherwick tried to explain that this email was an attempt to get answers to undertakings from the financial examination. However, this explanation made no sense since the financial examination took place on February 1, 2016, two weeks AFTER this email had been sent by Mr. Blatherwick. In addition, Mr. Blatherwick had not been asked any questions about Discovery Bay during the financial examination and gave no undertakings regarding Discovery Bay. Clearly, Mr. Blatherwick was lying. Eventually, when caught with these lies, Mr. Blatherwick retreated into "he needs to look for the email";

d) As set out in this court's Judgment, the Seasons Halloween Business’ sales are divided between Seasons HK and Seasons Macao. Seasons Macao has approximately 40-50% of the Seasons Halloween Business’s sales. Mr. Blatherwick owns 50% of the shares in Seasons Macao. The rest of the Seasons Halloween Business’ sales are through Seasons HK, of which Mr. Blatherwick has an indirect 1/7th interest. See the chart in the Judgment. As a result, even if one disregards Mr. Blatherwick’s indirect interest in Seasons HK, the sales through Seasons Macao are very significant, somewhere between $20,000,000 and $24,000,000 USD last year and Mr. Blatherwick owns 50% of Seasons Macao. The Judgment became a problem for Mr. Blatherwick because his shareholdings in Seasons Macao were registered in Macao. It is clear that upon the issuance of the Judgment, Mr. Blatherwick decided he needed to deal with Seasons Macao. Mr. Blatherwick was involved in several attempts (possibly successful) in 2015, shortly after the Judgment was issued, to move customer’s sales accounts from Seasons Macao to Seasons HK. See the emails at Exhibit 2 and 3 to the contempt hearing. While Mr. Blatherwick denied that any customer accounts have been moved from Seasons Macao - I don't believe him. Mr. Blatherwick appears to be involved with his partners in restructuring the way in which Seasons Halloween Business is operated to protect Mr. Blatherwick's interests in Seasons Macao from the enforcement of the Judgment. This attitude and financial dealings by Mr. Blatherwick and his partners is consistent with the evidence at trial, where Mr. Blatherwick admitted that:

• he assisted one of his partners receive a $150,000 to avoid the partner’s spouse (they were having matrimonial difficulties at the time) from knowing about the payment;
• he had one of his partners deliver monies to his fiancée so that Mrs. Blatherwick would not know about the payment.

The financial deception by Mr. Blatherwick and his partners continues;

e) Mr. Blatherwick was examined on February 1, 2016 in a financial examination. 51 undertakings were given by Mr. Blatherwick. None were answered as of the hearing of the contempt motion. Some of the undertakings are very significant such as the financial statements of Seasons Macau, where neither the 2014 or 2015 financial statements have been produced by Mr. Blatherwick. The lack of production of financial records by Mr. Blatherwick continues; and

f) While swearing in his affidavit for this hearing that he is no longer a director of Seasons Macao and has not been a director of Seasons Macao for about a year, when Mr. Blatherwick emptied his wallet in the witness stand, he had several business cards with his name showing that he was a director of Seasons Macao. Mr. Blatherwick claimed he needed the business cards to remember the Seasons Macao's address. But several? This just lends more evidence that Mr. Blatherwick and his partners will do and say anything to help out their partners in this “brotherhood of trust”.

The Evidence on the Mauritius Orangefield Insurance Policy

[15] Paragraph 5 of the Judgment provides:

5. The Respondent shall cash in his Mauritius Orangefield Insurance Policy and pay the proceeds to the Applicant within 30 days (approximate amount of $1,100,000.00 USD) in partial satisfaction of the Respondent’s equalization payment.

[16] This court found that Mr. Blatherwick is the "client" and owns the Policy. The Policy was shown as Mr. Blatherwick's property on several of his sworn Financial Statements, some prepared with the assistance of counsel. One of his Financial Statements was prepared just prior to trial and continued to show the Policy as his property.

[17] The Policy has a substantial cash surrender value - approximately $1,100,000 USD.

[18] The Judgment directed Mr. Blatherwick to “cash in” the Policy within 30 days and pay those monies to Mrs. Blatherwick in partial satisfaction of the payments ordered in the Judgment.

[19] The sole issue Mr. Blatherwick now raises with respect to the Policy is that only Simon Leung can cash in the Policy and Simon Leung refuses to do so. If believed, according to Mr. Blatherwick he would be content to cash in the Policy and pay the monies to Mrs. Blatherwick. I do not believe Mr. Blatherwick’s statement.

[20] Mr. Blatherwick submits that he showed the Policy as his property in his sworn Financial Statements on the advice of his prior family law counsel. He blames his former counsel. Mr. Blatherwick states that he has now learned that he is a "beneficiary" under a Trust which holds the Policy and he personally has no ability to “cash in” the Policy.

[21] No evidence was filed by Mr. Blatherwick from his previous family law counsel on the issue.

[22] This explanation by Mr. Blatherwick was never advanced at trial by Mr. Blatherwick.

[23] Mr. Blatherwick produced a Trust Instrument and a document which purports to show the Policy is an asset of the Trust, settled by - Suen Lap Leung. Who Suen Lap Leung is not specifically explained but it appears from the email correspondence it is Simon Leung, one of Mr. Blatherwick’s partners and one of the “brotherhood of trust”. According to Mr. Blatherwick, Simon Leung, as settlor, refuses to collapse the Policy.

[24] Again, for the first time (and contrary to the evidence at trial where Mr. Blatherwick testified that the Seasons Halloween Business paid for the Policy for the “partners”) Mr. Blatherwick testified that Simon Leung, either personally or by a loan, paid for the Policy. It is hard to believe that the monies came from Simon Leung when Mr. Blatherwick was the largest shareholder in the Seasons Halloween Business and he had testified at trial that the Seasons Halloween Business established these insurance policies for the “partners”.

[25] There is no evidence from Simon Leung regarding the establishment of the Trust or that the Policy was obtained by Simon Leung through a “loan”. There is no loan documentation.

[26] There is no evidence from Mauritius Orangefield Insurance as to who paid the premium for the Policy, who it considers is the client, or who can “cash in” its Policy – nothing.

[27] Mr. Blatherwick's explanation of a “loan” is now advanced because he now states that the cash surrender value is less than the outstanding loan used to acquire the Policy. Mr. Blatherwick does not explain how it could have been a substantial asset in his Financial Statement but now purportedly has little or no value. The "loan" was not shown in his Financial Statement.

[28] I do not accept Mr. Blatherwick’s evidence on this issue.

The Evidence on Seasons Limited - Macau Commercial Offshore

[29] Paragraph 8 of the Judgment provides:

8. Until such time as all payments herein are paid, Mr. Blatherwick shall not, without the written consent of Mrs. Blatherwick or a further court order, transfer, encumber or pledge any interest or control, including any subsidiary corporations inside or outside of Canada including, but not limited to, the following corporations:

g) Seasons Limited – Macau Commercial Offshore;

[30] As set out in the Judgment, Mr. Blatherwick is a 50% shareholder in Seasons Macau. Mr. Gravelle and Mr. Williams each owned 25% of the shares in Seasons Macau. Throughout the history of Seasons Macao, Mr. Blatherwick has been and during the trial was the sole director of Seasons Macau and had binding authority for Seasons Macau - including as signatory on Seasons Macao's financial matters.

[31] As stated above, approximately 40 - 50% of the Seasons Halloween Business’ sales are through Seasons Macau. Generally, in November of each year (after the Halloween season), Seasons Macau typically has approximately $15,000,000 USD in the bank. 2015 was a record good year for the Seasons Halloween Business having approximately $48,000,000 USD in sales.

[32] The clear and unambiguous purpose of para 8(g) of the Judgment was to prevent Mr. Blatherwick from transferring, encumbering or pledging any interest or control in Seasons Macao – an extremely valuable part of the Seasons Halloween Business until such time as the amounts in the Judgment had been paid to Mrs. Blatherwick.

[33] On June 18, 2015, Mr. Blatherwick wrote to Mr. Cox and stated that the Seasons Halloween Business is a " partnership even though Justice Riccetti ruled different. I have no signatory rights in the company and they say the award was far too large and will not help me. "

[34] The difficulty with Mr. Blatherwick's evidence is that:

a) the corporate structure in Seasons Macao worked for Mr. Blatherwick at trial but appears to no longer work for him to shield him from the effects and terms of the Judgment;

b) Mr. Blatherwick was the sole director and signing authority in Seasons Macao when he wrote this letter of June 18, 2015. Mr. Blatherwick admitted that he was removed as a director and signing authority on June 27, 2015; and

c) Mr. Blatherwick makes no reference in the letter to any proposed change in Seasons Macao's directorship and signing authority despite suggesting at this hearing he had received a "notice" of an extraordinary shareholder's meeting.

[35] On February 1, 2016, during the financial examination, Mr. Blatherwick advised that he was no longer a director of Seasons Macao. He testified that he remained a director of Seasons Macao up until April 27, 2015 and after that date was somehow removed as a Director.

[36] In February 2016 after the financial examination, Mrs. Blatherwick caused searches to be conducted in the Macao corporate registry offices. Those searches disclosed that on June 27, 2015, Mr. Blatherwick was removed as the director of Seasons Macao; Mr. Gravelle and Mr. Williams became the new directors; either of Mr. Gravelle or Mr. Williams are signing authorities on behalf of Seasons Macao.

[37] Mr. Blatherwick stated in his affidavit in this hearing:

I subsequently received a letter advising me of a general meeting on June 27, 2015. I do not believe that there was any reference in the letter to appointing new directors.

I have search my records for a copy of the letter and email but have not found them yet.

I was unable to travel to the meeting as it was in Macau.

I then learned that I had been removed as a direct by a vote from those who were in attendance.

[38] Mr. Blatherwick then appended a letter dated March 17, 2016 from a lawyer in Macao setting out that Mr. Blatherwick was not present at the meeting and did not vote on his dismissal as “administrator” of Seasons Macao.

[39] There is no affidavit from the lawyer in Macao. There is no evidence as to how a 50% shareholder could be removed as a director. There is no other evidence on this issue.

The Evidence of Non-Payment

[40] With respect to the monetary terms of the Judgment that Mr. Blatherwick pay to Mrs. Blatherwick an equalization payment and lump sum support payment, it is not disputed that he has not made these payments.

[41] The small amounts recovered by Mrs. Blatherwick by way of garnishment has not and will not likely come close to covering the post judgment interest.

The Law

The Applicability of the Trial Evidence

[42] In McClure v. Backstein, [1987] O.J. No. 498 (H.C.J.) Justice Steele was confronted with the argument that the trial evidence did not apply to the contempt hearing and concluded that the prior evidence was admissible in the contempt proceeding. Justice Steele stated:

[9] The debtor submitted that the evidence given on examination could not be referred to on the basis that it was incriminating evidence in another proceeding and therefore was prohibited by Article 13 of the Charter. The contempt proceeding is an integral part of the entire civil action from its commencement to judgment, and to enforcement thereof. The prior evidence was not in another proceeding but in the same proceeding. In any event evidence in a civil proceeding is not "incriminating evidence" within the meaning of Article 13. The debtor chose to defend the civil action and he must comply with the law. Article 13 does not protect him. (See Seaway Trust Co. v. Kilderkin Investments Ltd., , 29 D.L.R. (4th) 456 at 470 .

(emphasis added)

[43] Justice Steele's statement was accepted by Justice MacKenzie in Brit Corporation doing business as Quality Container Co., and Triumbari Containers Ltd., [2005] O.J. No. 2973 where the evidence from a prior examination in aid of execution was found to be part of the evidence in the contempt proceeding:

27 In the course of the reasons in which the court found that Rule 60.11 and 60.18 proceedings were not in essence penal but rather an instrument relating to the power of the court to enforce its process in its orders and judgments. In finding the proceedings meeting constitutional challenge, the court made the following findings:

The contempt proceeding is an integral part of the entire civil action from its commencement to judgment, and to enforcement thereof. (para. 9)

28 Counsel for Mr. Triumbari submits that this dictum enforces the view that the examination in aid of execution of Mr. Triumbari in relation to the judgment debt against the bankrupt defendant being an integral part of the entire civil action, from its inception to its enforcement, is within the ambit of the terms "execution or other proceedings" in s. 69.3(1) of the Act. I accept this submission.

[44] In my view, it makes little sense that the evidence in the same proceeding, between the same parties, must be re-heard by the judge hearing the contempt motion. The basis of the trial judge’s findings of facts and the surrounding circumstances all assist the judge hearing the contempt motion. There is no prejudice to either party. They were present and participated in the proceeding.

[45] In Katz v. Katz, 2014 ONCA 606, the Court of Appeal specifically considered the evidence in the original motion leading to the order in question to assess whether the party wilfully and deliberately disobeyed the order or had made all reasonable attempts to comply with the order.

The Law of Civil Contempt

[46] This case involves alleged civil contempt. In Poje v. British Columbia (Attorney General), , [1953] 1 S.C.R. 516, the Supreme Court distinguished criminal contempt from civil contempt as follows:

And, generally, the distinction between contempts criminal and not criminal seems to be that contempts which tend to bring the administration of justice into scorn, or which tend to interfere with the due course of justice, are criminal in their nature ; but that contempt in disregarding orders or judgments of a Civil Court, or in not doing something ordered to be done in a cause, is not criminal in its nature. In other words, where contempt involves a public injury or offence, it is criminal in its nature , and the proper remedy is committal -- but where the contempt involves a private injury only it is not criminal in its nature.

[47] The three essential requirements for a finding of civil contempt were set out by Blair J.A., in Prescott-Russell Services for Children and Adults v. G. (N.) et al. (2007), , 82 O.R. (3d) 686 (C.A.):

[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.

[48] Courts should only invoke its contempt powers in the clearest of cases and with the greatest of caution. R. v. Cohn (1984), , 48 O.R. (2d) 65 at 76 (C.A.). It is to be used sparingly and as a remedy of last resort where another adequate remedy is not available to seek to enforce this court’s order.

[49] In Sweda Farms Ltd. (c.o.b. Best Choice Eggs) v. Ontario Egg Producers, 2011 ONSC 3650, [2011] O.J. No. 3482, Justice Lauwers (as he then was) summarized the applicable principles and purpose of contempt proceedings:

18 In a civilized society governed by the rule of law, such as ours, people are expected to and do comply with court orders. But in the rare cases that they do not, the court must take action. 2 As Pepall J. stated: "Once an order has been obtained, it is imperative that it be obeyed, that the public understand that it must be obeyed, and that judges have the will and ability to ensure compliance." 3 There are many other similar expressions of judicial resolve. See, for example, the following statement of Blair J.: "No society which believes in a system of even-handed justice can permit its members to ignore, disobey, or defy its laws and its courts, orders at their whim because in their own particular view it is right to do so." 4

19 The nature of the contempt may vary with the context, with slightly different considerations taken into account. 5 Cumming J. noted that the court's authority over court orders includes orders relating to commercial matters:

The deliberate failure to obey a court order strikes at the very heart of the administration of justice. This includes court orders relating to commercial matters as seen in the case at hand. If someone can simply ignore or finesse his way around a court order it will tend to add uncertainties and risks, with consequential inefficiencies and additional costs, as well as causing unfairness, with consequential inequities and additional costs, to the commercial marketplace. Just as white collar crime is crime, white collar contempt is contempt. 6

20 I summarize briefly the relevant aspects of the law of civil contempt for failing to comply with a court order. Given the gravity of a finding that a person is in contempt and the exposure to penalties, the court should always exercise prudence and restraint before making such a finding. 7

21 The order "must state clearly and unequivocally what should and should not be done." 8 It must be directive and not simply permissive. 9 In terms of compliance, the alleged contemnor must have knowledge of the nature of the terms of the order, 10 and, once having knowledge, must obey the order in letter and spirit with every diligence. 11 A person who is subject to an order should not be permitted to "finesse" 12 it or to "hide behind a restrictive and literal interpretation to circumvent the order and make a mockery of it and of the administration of justice. " 13

22 The alleged contemnor's conduct must objectively breach the order. There is also a mental or subjective element, often expressed in the formula that the disobedience must be deliberate and wilful, 14 or wilfully blind, indifferent or reckless. 15 Actionable disobedience includes the deliberate failure of a person to make inquiries in circumstances where suspicion is or should be aroused. 16 Further, "[i]f a party feels that the injunction is over-broad, its recourse is to apply to have the terms narrowed or made more explicit, not to resort to self-help by ignoring some or all of the terms." 17

23 There is some subtlety here. An element of the classical formulation is that "any act done or writing published calculated to obstruct or interfere with the due course of justice or the lawful process of the Courts is a contempt of Court." 18 McIntyre J.A. noted, however, "The word 'calculated' as used here is not synonymous with the word 'intended'. The meaning it bears in this context is found in the Shorter Oxford English Dictionary as 'fitted, suited, apt'." 19 Accordingly, the moving party does not need to prove that the alleged contemnor intended specifically to disobey the order: "The offence consists of the intentional doing of an act which is in fact prohibited by the order." 20 The alleged contemnor need not be shown to exhibit "any particular aversion, abhorrence or disdain of the judicial system" despite the ordinary meaning of the word "contempt." 21

24 The moving party must prove contempt at the highest threshold -- that is, beyond a reasonable doubt. 22 The quasi-criminal nature of the accusation engages principles and concepts more familiar in a criminal law context. For example, the onus of proof remains on the moving party throughout; it never shifts. 23 Further, the alleged contemnor is not compelled to testify; 24 but, if he chooses to testify, his evidence is subject to full scrutiny, and the court may draw adverse inferences from his evidence.

25 I am required to work through three steps, adapting the criminal jury instruction. First, if I believe Mr. Bourdeau's exculpatory evidence, then I must dismiss the motion. Second, if I do not believe his exculpatory evidence but I am nonetheless left in reasonable doubt by it or otherwise have a reasonable doubt about where the truth of the matter lies, then I must dismiss the motion. Third, even if I am not left in doubt by Mr. Bourdeau's evidence, I must ask myself whether, on the basis of the evidence that I do accept, I am convinced beyond a reasonable doubt by that evidence that Mr. Bourdeau is in contempt of court. 25 This approach applies to credibility findings in respect of disputed evidence on the elements of contempt of court and on the elements of defences raised to it. 26

26 Any reasonable doubt must be resolved in favour of the alleged contemnor. 27 A reasonable doubt is not to be an imaginary or frivolous doubt, nor may it be based on sympathy or prejudice. It must be based on reason and common sense, logically derived from the evidence or absence of evidence. But the court recognizes that it is virtually impossible to prove anything to an absolute certainty and the moving party is not required to do so. 28

27 Where contempt is found in a civil case, the court's focus is usually on obtaining compliance, not punishment, 29 but punishment may be meted out where appropriate. 30

(emphasis added)

[50] It is unnecessary to prove that the alleged contemnor intended to put himself or herself in contempt. However, it must be established that he or she deliberately or wilfully or knowingly did some act which was designed to result in the breach of a court order. See R. v. Perkins (1980), , 51 C.C.C. (2d) 369 (B.C.C.A.); R. v. Barker, 1980 ABCA 75, [1980] 4 W.W.R. 202 (Alta. C.A.); and Rivard v. Proc. Gen. du Quebec, , [1984] R.D.J. 571 (Que. C.A.).

[51] A court’s contempt powers cannot be used to enforce payment terms of an order. See Rule 26(4) of the Family Law Rules.

Clear and Unambiguous Terms in the Order

[52] The terms of the order must be clear and unambiguous. However, this does not mean the party who is to comply with the order may take technical or literal interpretations to circumvent the spirit and intent of the order – provided that the spirit and intent of the order is clear from the terms set out in the Order.

[53] In Boily, ante, the Ontario Court of Appeal stated:

58 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.

59 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, , 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."

(emphasis added)

Failure to Comply with the Terms of the Order

[54] It is not necessary that the alleged contemnor have actively done something or committed some act for him or her to be in contempt of the order. The alleged contemnor cannot simply stand by and do nothing while the terms of the Order requiring the alleged contemnor to do some specific act are disregarded. This would be particularly true where the alleged contemnor has the ability to prevent the terms of the Order from being breached.

[55] Jeffrey Miller, in The Law of Contempt in Canada, 1997 Carswell at page 92 stated:

It is no defence to this variety of contempt that the contemnor did not actively commit the breach - that is, that the contemnor merely stood by while the terms of the order were frustrated. For example, in Glazer v. Union Contractors Ltd., the British Columbia Supreme Court had ordered that the contemnor's company was not to deal with certain moneys; on receipt by the company's agent, the money's were to be transferred to a receiver. When the contemnor failed to notify his bank of the order, the Court of Appeal gave short shrift to his plea that no contempt existed insofar as his nonfeasance amounted to an act of omission, commission. Given that those affected by court order must do all that they can to carry out the terms, even postponement of compliance would amount to contempt.

(emphasis added)

Collateral Attack on the Judgment

[56] The alleged contemnor cannot, by way of a collateral attack, challenge the validity of the order except on jurisdictional grounds.

[57] In R. v. Litchfield, , [1993] 4 S.C.R. 333 at paras. 14 and 17, the court stated:

The rule against collateral attack in contempt proceedings is well-established and is founded on the rule of law. Courts have consistently refused to permit an accused contemnor to challenge the validity of the order underlying the contempt charge except on jurisdictional grounds. As the Supreme Court has held, "the orderly and functional administration of justice requires that court orders be considered final and binding unless they are reversed on appeal."

[58] Similarly, Jeffrey Miller, in The Law of Contempt in Canada, 1997 Carswell at page 95 stated:

It is no defence that the court order is incorrect, null, unconstitutional, or under appeal, and thus "ineffective". The order stands, and commands respect in all of its aspects, until it is reversed on appeal "or an equally effective order [is] secured to the effect that it need not be obeyed."

Alleged Impossibility of Performance of the Court Order

[59] The alleged contemnor cannot simply do nothing and, when alleged to be in contempt of the court order, submit that performance of the order was not possible. The alleged contemnor must take action by way of appeal, or seek directions from the court or seek a variation of the subject court order.

[60] In Boily v. Carelton Condominium Corp., 2014 ONCA 574.

38 The motion judge rejected the Appellants' arguments that restoring the Podium to the Original Design was impossible and/or ill-advised. He accepted the evidence of the Respondents' experts, which was not contradicted by any other expert evidence.

39 In any event, relying on authorities such as Sussex Group Ltd. v. 3933938 Canada Inc. (c.o.b. Global Export Consulting) (2003), 124 A.C.W.S. (3d) 274 (Ont. S.C.) ("Sussex"), Miller, and Garley v. Gabai-Maiato, 2006 ONCJ 28, the motion judge held that in circumstances in which the underlying order is considered "ineffective", the appropriate course of action is not disobedience. The appropriate course of action is either to move for directions as soon as the problem becomes apparent, as the motion judge had expressly invited the parties to do, or appeal. The Appellants did neither.

(emphasis added)

The Analysis

Evidence at Trial

[61] Mr. Blatherwick's counsel submits that the evidence at trial is not evidence in this proceeding because the standard of proof of facts at trial was on the balance of probabilities and the standard of proof of facts in this hearing is beyond a reasonable doubt. This is simply wrong.

[62] The requirements for contempt only require that, the evidence as a whole, establish each of the required essential elements of the alleged contempt beyond a reasonable doubt. That does not mean that every fact must be established against the alleged contemnor beyond a reasonable doubt, only that the evidence, when considered as a whole, establishes each of the essential elements of contempt beyond a reasonable doubt.

[63] On the basis of the above authorities, I am satisfied that the evidence at trial is evidence in this contempt proceeding because:

a) it is the same proceeding between the same parties;

b) it would be contrary the efficient administration of justice if this court were required to rehear all the evidence at the trial;

c) It would be easy for the alleged contemnor to hide behind evidence given at trial, which they urged on the court in support of their claim, only to advance a very different or other untruthful evidence at the contempt hearing and thereby require the party bringing the motion to re-litigate the evidence at trial;

d) the standard of proof does not apply to individual pieces of evidence. It applies to the evidence as a whole – the evidence at trial and the evidence on the contempt hearing. The alleged contemnor only has to point to any evidence, at trial or the contempt hearing, that there is a reasonable doubt that any one of the essential elements of contempt has been proven. There is no unfairness to the parties who were present at trial and the contempt motion, led evidence, cross-examined and made submissions on the evidence; and

e) the strict prohibition of a collateral attack on the Judgment is intended to avoid a re-litigation of the terms imposed by the court based on the trial evidence. If the evidence had to be reheard, there could be inconsistencies in the evidence or lead to submissions that the term(s) should never have been imposed. Instead, the onus is on the party who seeks a variation of the terms of the order to bring a motion and establish the need for a change of the terms of the Judgment.

Orangefield Mauritius Trust Policy

[64] There is no allegation that the term relating to the Policy in the Judgment is ambiguous. The sole issue raised by Mr. Blatherwick is that he cannot comply with paragraph 5 of the Judgment to “cash in” the Policy.

[65] Mr. Blatherwick does NOT argue that paragraph 5 of the Judgment is a provision for the payment of monies subject to the restriction against a contempt order in Rule 26(4) of the Family Law Rules.

[66] I am not prepared to entertain this collateral attack on the finding that the Policy is Mr. Blatherwick’s property which he is capable of “cashing in”. Mr. Blatherwick’s evidence is rejected, it does not raise a reasonable doubt and I am satisfied beyond a reasonable doubt that Mr. Blatherwick is in contempt of this term of the court’s Judgment. On this basis alone, I find that Mr. Blatherwick is in contempt of the Judgment.

[67] Even if this court were to consider this to be a motion by Mr. Blatherwick to vary paragraph 5 of the Judgment, I would have dismissed Mr. Blatherwick’s motion. There are numerous problems with Mr. Blatherwick’s position that he cannot “cash in” the Policy:

a) The suggestion that Mr. Blatherwick's previous lawyer didn't understand that the Policy was not the property of Mr. Blatherwick is difficult to accept given the fact Mr. Stuart Law is an experienced family lawyer and Mr. Blatherwick has not put before this court an affidavit from Mr. Law, or someone from his office, to explain how they arrived at the conclusion it was Mr. Blatherwick’s property or that it was an error on their part;

b) There is no expert evidence or evidence from the insurance company before this court that Mr. Blatherwick, the "client" of the Policy cannot cash in the Policy with Orangefield Mauritius Insurance;

c) The alleged Trust arrangement comes late in this proceeding and makes very little sense because the Policy itself shows Mr. Blatherwick as the “client” and Mrs. Blatherwick as the “beneficiary” under the Policy. How can that be reconciled with the Policy being the property of the Trust? No explanation is offered by the Trust or by the Orangefield Mauritius Insurance;

d) Mr. Blatherwick's first email raising the issue of “cashing” out the Policy is dated March 13, 2016, almost a year after the Judgment was issued and is dated only after this contempt motion was brought. The 30 days set out in this court’s Judgment to cash in the Policy was simply ignored. Aside from Mr. Blatherwick's viva voce evidence that he spoke with Simon Leung at some point in time, there is no evidence that Mr. Blatherwick did anything within the 30 days specified by this court to cash in the Policy. Mr. Blatherwick points to a letter of June 1, 2015 where he states that he does "not own the Trust and cannot cash it". Mr. Blatherwick did not offer the explanation he offers today. In any event, June 1, 2015 is outside the 30 days of the Judgment;

e) Orangefield Mauritius Insurance wrote on March 14, 2016 asking " Kindly confirm who should be giving the instruction to the insurance company for the surrender - should it be the Settlor or the life insured ". Even the insurance company holding the Policy appears uncertain as to how the Policy is to be cashed in almost one year after the Judgment. I note from Exhibit D to Mr. Blatherwick's affidavit that Orangefield Mauritius Insurance has offices in Toronto and yet, they gave no evidence at this hearing;

f) The email from the Bank of Singapore state that the "trust and insurance policy all belong to Simon [Leung]" - one of Mr. Blatherwick's partner's and whose credibility was seriously compromised at trial – one of the “brotherhood of trust”. In any event, there is no evidence for the basis of the “banker’s” statement or that it is true; and

g) There is no other evidence from the Trustees, Simon Leung, a lawyer in Macau or what law applies, how this Policy can be cashed in, who is to give instructions on the Policy - nothing.

[68] I am satisfied that Mrs. Blatherwick has established beyond a reasonable doubt that Mr. Blatherwick has deliberately and wilfully refused to comply with paragraph 5 of the Judgment to:

a) cash in the Policy within 30 days as ordered; and

b) cash in the Policy at all .

Impossibility of Performance

[69] I reject this argument. As set out in the above authorities, it was incumbent on Mr. Blatherwick to either appeal the Judgment or to seek directions/variation of the term of the Judgment which he alleged he could not comply with. Mr. Blatherwick has not done so. As a result, paragraph 5 of the Judgment is in full force and effect at this time.

[70] The Defence relies on Lampron v. Lampron, to suggest that impossibility of performance can be considered by this court to avoid a finding of contempt. The Lampron decision does not stand for the proposition put forward by the Defence. It is a decision where the court was not satisfied that the wife had deliberately and voluntarily breached the order.

[71] The Defence also relies on Katz v. Katz, 2014 ONCA 606. The trial judge dismissed the motion for contempt. The husband alleged he had been prevented from obtaining the life insurance because of surgery for prostate cancer. The trial judge hearing the contempt motion accepted that the husband had attempted to comply with the divorce order and dismissed the motion for contempt. The wife appealed. The difficulty of obtaining the insurance was obvious in light of the clear medical condition of the husband. Even the wife had admitted in her material at the contempt motion that the husband " may still be insurable". The Court of Appeal upheld the trial judge on the basis there was considerable evidence before the trial judge as to the husband's efforts to obtain life insurance. As a result, it was open to the trial judge to come to the conclusion that the husband had not deliberately and wilfully disobeyed the order to obtain life insurance. Further, the Court of Appeal concluded that it was implicit in the wife's evidence that the husband "cannot comply with the order that was made. In these circumstances, the proper course is to move to change the existing order." See para 64.

[72] Neither of these authorities assists Mr. Blatherwick.

[73] This court would have, even if necessary, rejected Mr. Blatherwick’s submission that he cannot comply with paragraph 5 of the Judgment.

Conclusion

[74] Mr. Blatherwick is in contempt of paragraph 5 of the Judgment.

Seasons Limited - Macau Commercial Offshore

[75] Mr. Blatherwick's sole submission on this issue is that he did not "transfer" control of Seasons Macao. Mr. Blatherwick's counsel admits there was a transfer of control of Seasons Macao by and to Messrs. Gravelle and Williams but submits that Mr. Blatherwick did not perform the "transfer".

[76] At the contempt hearing Mr. Blatherwick produced a notice of extraordinary shareholders meeting dated June 2, 2015 ("Notice"). Mr. Blatherwick "believes" he received the Notice in June 2015 but couldn't remember. Contrary to what Mr. Blatherwick stated in his affidavit that the “letter” (not Notice) didn’t deal with removing him as a director, the sole purpose of the Notice of the extraordinary shareholders meeting was the "dismissal of the sole director, Mr. Brian Blatherwick" and the "appointment of a new director".

[77] Mr. Blatherwick couldn't recall when he received the Notice, a highly important document for a 50% shareholder of a very valuable and profitable business. Mr. Blatherwick doesn't have the original Notice. Mr. Blatherwick had to request a copy of the Notice, which was only recently sent to him, but there is no covering letter, fax header, email - nothing. Mr. Blatherwick’s evidence is simply not believable.

[78] Mr. Blatherwick testified he didn't attend the shareholder’s meeting on June 27, 2016 because he didn’t have a passport and therefore couldn’t travel to attend the shareholders meeting. Mr. Blatherwick made no attempt to vary the Judgment so that he could attend the shareholder’s meeting. Despite continuing communications, Mr. Blatherwick didn't put Mrs. Blatherwick’s counsel on notice of the upcoming shareholder's meeting. Mr. Blatherwick first stated that he was no longer a director or signing authority of Seasons Macao on February 1, 2016 during the financial examination where Mr. Blatherwick said:

526 Q. Do you have a formal letter from anybody saying you're no longer a director of Seasons Macao?

A. Actually, I don't think I do.

[79] Mr. Blatherwick now says that he was simply told over the phone by Simon Leung, (his “partner” in the Seasons Halloween Business, who is neither a shareholder, officer nor director in Seasons Macao) that Mr. Blatherwick was no longer a director of Seasons Macao.

[80] Mr. Blatherwick put forward no documents which showed he attempted to vote by proxy, attend by video conferencing or took any steps to retain control of Seasons Macao prior to or after the shareholder’s meeting. Nothing.

[81] Mr. Blatherwick has made no enquiries regarding or attempts to regain control of Seasons Macao. Mr. Blatherwick has not retained a lawyer to deal with this issue.

[82] There is no copy of Seasons Macao’s by law or expert evidence as to how shareholders meetings are called, how shareholders attend, how shareholders can vote in Seasons Macao or the governing law. Nothing.

[83] There is no document showing who called the shareholder’s meeting. There are no minutes of the meeting removing Mr. Blatherwick as director of Seasons Macao. There is no copy of the resolution of that meeting. Nothing.

[84] Mr. Blatherwick would have this court believe that he was not involved in the transfer of control in Seasons Macao and has not taken any steps to regain control of Seasons Macao, a valuable company that he started and continues to own 50%. I do not accept Mr. Blatherwick’s evidence that he did not participate in and permitted the transfer of the control of Seasons Macao. The only reasonable and rational inference from the evidence is that Mr. Blatherwick participated in and permitted the transfer of control from him of Seasons Macao to put his interest in Seasons Macao further out of reach of Mrs. Blatherwick and the Judgment.

[85] This court is satisfied beyond a reasonable doubt that Mr. Blatherwick intended to defeat the spirit, intent and purpose of paragraph 8 (g) of the Judgment by participating in and permitting the transfer of control in Seasons Macao from himself to Messrs. Gravelle and Williams.

[86] This court rejects Mr. Blatherwick’s evidence in its entirety. It does not leave this court with any doubt that this transfer of ownership was orchestrated by or with Mr. Blatherwick’s assistance and approval. Mr. Blatherwick’s evidence does not leave this court with any reasonable doubt that he participated in and permitted the transfer of control in Seasons Macao despite the clear prohibition in the Judgment. I am satisfied that the evidence establishes beyond a reasonable doubt that Mr. Blatherwick wilfully and deliberately breached paragraph 8(g) of the Judgment.

Failure to Pay the Amounts in the Judgment

[87] I see no reason why such declarations are necessary or reasonably required. It is clear, and admitted by Mr. Blatherwick, that he has not paid the amounts due to Mrs. Blatherwick under the Judgment. Unless there is some other unexplained reason for seeking this relief, this part of the motion is adjourned.

Conclusion

[88] Mr. Blatherwick is in contempt of the Judgment having wilfully and deliberately breached paragraphs 5 and 8 (g) of the Judgment.

[89] The penalty phase of this contempt hearing is adjourned to a date to be fixed by the Trial Coordinator’s Office, at least 30 days after the release of these reasons, to permit Mr. Blatherwick an opportunity to purge his contempt.

Costs

[90] Any party seeking costs shall serve and file written submission on entitlement and quantum within two weeks of the release of these reasons. Written submissions shall be limited to five pages. Costs Outline and any authorities may also be attached.

[91] Any responding party shall have one week thereafter to serve and file responding submissions. Written submissions shall be limited to five pages. Costs Outline and any authorities may also be attached.

[92] There shall be no reply submissions without leave.

Ricchetti, J. Date: May 09, 2016