Business Development Bank of Canada v. Cavalon Inc., 2016 ONSC 6825
CITATION: Business Development Bank of Canada v. Cavalon Inc., 2016 ONSC 6825
COURT FILE NO.: 2454/14
DATE: 2016-11-07
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
BUSINESS DEVELOPMENT BANK OF CANADA
Applicant
– and –
CAVALON INC., 2365222 ONTARIO LIMITED, AUTOMETRIC AUTOBODY INC., 2145009 ONTARIO INC. and ROBERT FRANCIS BORTOLON also known as ROBERT BORTOLON
Respondents
COUNSEL:
Benjamin Frydenberg and Sam Rappos, for the Applicant
Doug LaFramboise, for the Respondents
A.J. Esterbauer for Robyrt Regan, a non-party
HEARD: September 30, 2016
REASONS FOR JUDGMENT
GRAY J.
[1] In my reasons for judgment dated June 20, 2016, (2016 ONSC 4084), I found Robert Bortolon and Robyrt Regan in contempt of an order of LeMay J. dated March 11, 2015. In substance, that order required that Mr. Regan, the former solicitor for Mr. Bortolon, make available to counsel for the applicant certain documents for inspection. I found that Mr. Regan and Mr. Bortolon made a deal under which a number of documents would be shipped to Mr. Bortolon rather than being made available for inspection by the applicant. I found that it was agreed between Mr. Bortolon and Mr. Regan that if Mr. Bortolon settled his dispute with Mr. Regan, a number of incriminating documents would be shipped to Mr. Bortolon. I found that, in fact, occurred. Fourteen boxes were shipped to Mr. Bortolon by Mr. Regan. Five boxes were shipped to applicant by Mr. Bortolon.
[2] I noted that counsel for the applicant did not seek a penalty against the contemnors. Rather, he sought an order striking the responding material of all of the respondents and, in effect, a default judgment. Counsel argued that his client can no longer receive a fair hearing as a result of the non-production of documents.
[3] I elected to have a separate penalty hearing, which I conducted on September 30, 2016.
Developments since the delivery of my reasons for judgment on June 20, 2016
[4] Both Mr. Bortolon and Mr. Regan have filed material since the delivery of my reasons for judgment on June 20, 2016.
[5] Mr. Bortolon has filed two supplementary affidavits, and his counsel has filed a supplementary affidavit of Gaspare Caruso.
[6] In his own affidavits, Mr. Bortolon has effectively taken the position that he received only five boxes of material from Mr. Regan, and he shipped all of them to the solicitors for the applicant. In much of the balance of the material, he alleges that the applicant and its solicitors have acted dishonourably in pursuing the matters against him. He also alleges that Mr. Regan has acted dishonestly in his dealings with him, and in the positions he has taken in this litigation.
[7] In addition, Mr. Bortolon has filed a “basket” motion, in which he makes a broad attack on virtually all of the various proceedings that have been taken against him, and contends that all of the various orders, including the one made by me, were fraudulently obtained. I have dismissed that motion, as it is misconceived.
[8] Mr. Caruso is a Vice President of 2365222 Ontario Limited, and fundamentally he takes the position that the applicant has no claim against any assets owned by 2365222 Ontario Limited, and asserts that that company is entitled to the insurance funds that are in court.
[9] Mr. Regan has filed two affidavits. One is a supplementary affidavit in two volumes, sworn September 16, 2016, and the other is a further supplementary affidavit sworn September 23, 2016.
[10] In his material, Mr. Regan fundamentally takes the position that he was not in contempt of the order of LeMay J. He explains that he had retained in his possession all documents that had any relevance, and made them available to the solicitors for the applicant when they attended to examine the documents. He explains the letter that he wrote to Mr. Laframboise, Mr. Bortolon’s counsel, in which he appears to suggest that he would ship to Mr. Bortolon any incriminating documents if Mr. Bortolon would settle Mr. Regan’s claim, as being a “bluff”. Mr. Regan also says he has located a few further documents since the conclusion of the contempt hearing on June 20, 2016, and he has furnished them to counsel for the applicant.
[11] In his affidavit sworn on September 16, 2016, he has included the following paragraphs:
I truly regret the incident. I thought by writing the LaFramboise letter, and launching settlement discussions with Mr. Bortolon through his lawyer, I could finally bring Mr. Bortolon’s war against me to a speedy conclusion. In hindsight, it was an ill-advised decision, made while I was under duress and fearful of my family’s safety. My mistake has now resulted in serious personal and professional consequences to myself and has affected the lives of my family and the three employees in my law office who depend on me for their livelihood.
I never intended to violate the terms of the LeMay Order and I believe that the documents I retained and ultimately produced to BDC fulfilled my obligations thereunder. It was unfortunate that counsel for BDC obtained the LaFramboise Letter and wrongly assumed from its contents that I had conspired with Mr. Bortolon to withhold incriminating documents. I would never have done that and I am sorry that I gave them reason to think so. Finally, I am truly sorry that my conduct has hhad the appearance of bringing the administration of justice into dispute.
Submissions
[12] Mr. Frydenberg, counsel for the applicant, reaffirms that he is not seeking a penalty against either Mr. Bortolon or Mr. Regan. Rather, he seeks an order striking the responding material and, in effect, granting default judgment in favour of his client.
[13] Mr. Frydenberg submits that the conduct of the contemnors is very serious, and would justify a significant penalty if the court were disposed to impose one. That, however, is for the court to decide having regard to the public interest. The applicant’s interest is in securing an order vindicating its right to a fair proceeding. As a result of the actions of Mr. Bortolon and Mr. Regan, a fair proceeding can no longer be assured.
[14] Mr. Frydenberg notes that subsequent to the issuance of my reasons, Mr. Bortolon has commenced other proceedings in which he attacks the integrity of the court, different judges, and the applicant’s lawyers.
[15] Mr. Frydenberg submits that I should consider certain factors in determining an appropriate sanction:
a) The proportionality of the sanction to the wrongdoing;
b) Mitigating factors;
c) Aggravating factors;
d) Deterrence and denunciation;
e) Similarity of sanctions in like circumstances;
f) The reasonableness of a fine or incarceration.
[16] Mr. Frydenberg submits that deterrence is the most important objective. Punishment must serve as a disincentive for those who might be inclined to breach court orders.
[17] At the same time, a sanction must be consistent with the other party’s right to a fair hearing. Where the action of the contemnors has detrimentally affected the other party’s right to a fair hearing, the court should impose a sanction that vindicates, as best it can, the other party’s interest in fairness.
[18] Counsel for Mr. Bortolon acknowledges that his client has taken some positions that cannot realistically be advanced by counsel. Mr. LaFramboise candidly acknowledged that he cannot, on this record and in these circumstances, contend that the finding of contempt ought not to have been made, or that various judges and lawyers have acted unethically in dealing with Mr. Bortolon.
[19] Mr. LaFramboise submits, however, that the court should be sensitive to Mr. Bortolon’s feeling of injustice in arriving at a decision concerning the appropriate penalty. Mr. Bortolon quite rightly fixes most of the responsibility on Mr. Regan for the predicament. It was Mr. Regan who wrote a foolish letter that appeared to suggest the commission of improprieties in exchange for a deal. Mr. Bortolon insists that he transmitted five boxes of material to the applicant’s solicitors, which is all he received from Mr. Regan. His evidence as to how many boxes he received from Mr. Regan should be preferred.
[20] In the result, Mr. LaFramboise submits that a non-custodial penalty should be preferred, if the court is disposed to impose any penalty.
[21] Mr. Esterbauer, counsel for Mr. Regan, also acknowledges that in view of my finding of contempt it is not open to Mr. Regan to revisit that issue. However, Mr. Esterbauer notes that Mr. Regan has filed affidavit material in which he takes the position that he did not intentionally violate the order of LeMay J. He is truly sorry for writing a letter to Mr. LaFramboise that could be, and indeed was, misunderstood. He is sorry for doing something that appeared to bring the administration of justice into disrepute.
[22] Mr. Esterbauer submits that a non-custodial penalty would be appropriate, if the court is disposed to impose any penalty.
[23] Because the proceedings are quasi-criminal in nature, I invited Mr. Bortolon and Mr. Regan to address me personally if they chose to do so. Both of them did.
[24] Mr. Bortolon offered no apology for his conduct. Rather, he reiterated his belief that the proceedings against him were taken in bad faith, and various orders by judges were misconceived and wrong.
[25] Mr. Regan offered an apology. However, it was couched in terms similar to the apology expressed in his affidavit – that is, he was sorry that his conduct had the appearance of bringing the administration of justice into disrepute. He advised me that he is married with children, and a period of incarceration would be a hardship on him and his family.
Analysis
[26] It has been stated more than once that while sanctions for contempt are to be imposed sparingly, nevertheless, their availability is essential to the administration of justice. If the court is not prepared to punish transgressors where orders have been violated, the orders themselves are of little use.
[27] Before addressing the appropriate sanction, I will deal with one preliminary matter. Both Mr. Bortolon and Mr. Regan have sought in their recent material to persuade me that they were not in contempt of the order of LeMay J. In my view, they are not entitled to do so.
[28] Such an approach was definitively put to rest by the Supreme Court of Canada in Carey v. Laiken, 2015 SCC 17, [2015] 2 S.C.R. 79. At paras. 65 and 66, Cromwell J. stated:
The starting point is that, in civil proceedings, once a finding of contempt has been made at the first stage of a bifurcated proceeding, that finding is usually final. As the Court of Appeal stated, “[a] party faced with a contempt motion is not entitled to present a partial defence [at the liability stage] and then, if the initial gambit fails, have a second ‘bite at the cherry’” at the penalty stage (para. 32). This would defeat the purpose of the first hearing. This is what the judge at first instance erroneously permitted Mr. Carey to do.
Without exhaustively outlining the circumstances in which a judge may properly revisit an initial contempt finding, I agree with the Court of Appeal that he or she may do so where the contemnor subsequently complies with the order or otherwise purges his or her contempt or, in exceptional circumstances, where new facts or evidence have come to light after the contempt finding was made.
[29] It is clear, in my view, that an initial contempt finding may be revisited only where the contemnor purges his or her contempt or, in exceptional circumstances, where new facts or evidence have come to light after the contempt finding was made. It cannot seriously be contended, in my view, that either Mr. Bortolon or Mr. Regan has purged his contempt. In view of my findings in my original reasons for judgment, it is doubtful that they could do so. Effectively, I found that incriminating documents had been sent to Mr. Bortolon by Mr. Regan, and that they had then disappeared. I found that this course of action was part of a deal that was made between Mr. Regan and Mr. Bortolon. It is highly unlikely that the court could be satisfied that all relevant documents have been subsequently produced.
[30] It is also clear that neither Mr. Bortolon nor Mr. Regan, and particularly Mr. Regan, are trying to rely on new facts or evidence that have come to light after the contempt finding was made. What Mr. Regan is effectively trying to do, in my opinion, is put in evidence facts and material that should have been filed at the first hearing. In my view, he is doing what the Court of Appeal and Cromwell J. for the Supreme Court of Canada held that he is not entitled to do, namely, present a partial defence at the liability stage and then, when that initial gambit failed, have a second “bite at the cherry” at the penalty stage.
[31] I have already found Mr. Bortolon and Mr. Regan to be in contempt, and it is simply too late to revisit that finding now.
[32] What, then, is an appropriate sanction?
[33] As to mitigating factors, I am not aware that either Mr. Bortolon or Mr. Regan has a criminal record. As far as I know, there is no history of violating court orders.
[34] An apology would ordinarily be a mitigating factor. However, there is no apology from Mr. Bortolon. Mr. Regan’s apology is, at best, equivocal. He says he is sorry that his conduct has had the appearance of bringing the administration of justice into disrepute. With respect, that is not a true apology. It is preceded by the explanation that he did not really mean what he said in his letter to Mr. Laframboise, and by an explanation that he was not really in contempt.
[35] A purging of contempt would ordinarily be a mitigating factor. Indeed, one of the purposes of a separate penalty hearing is to give the contemnors an opportunity to purge their contempt. There has been no purging of contempt here, and as noted, it is doubtful if it really could be purged in these circumstances.
[36] As far as aggravating factors is concerned, I found in my original reasons that the conduct of Mr. Regan and Mr. Bortolon was an affront to the administration of justice and a serious violation of a court order. I remain of that view. Where a person governed by a court order barters non-compliance with the order for some personal advantage, it is very serious indeed. It suggests that a court order is something that can be ignored if there is a personal advantage in doing so. The circumstances of the contempt here are very serious, and constitute an aggravating factor.
[37] Deterrence and denunciation are primary factors, particularly in the circumstances of this case.
[38] Significant custodial penalties have been imposed for serious violations of court orders. I would mention the following:
a) GM Textiles Inc. v. Sidhu, 2016 ONSC 2055 – Four months consecutive for breach of four orders;
b) Blatherwick v. Blatherwick, 2016 ONSC 4630 – 180 days;
c) Echostar Communications Corporation v. Rodgers, 2010 ONSC 2164 – Four months;
d) Nelson Barbabos Group Ltd. v. Cox, 2010 ONSC 569 – Three months and a $7,500 fine;
e) Sussex Group Ltd. v. Sylvester (2002), 2002 CanLII 27188 (ON SC), 62 O.R. (3d) 123 (S.C.J.) – Six months;
f) Sussex Group Ltd. v. Fangeat (2003), 42 C.P.C (5th) 274 (Ont. S.C.J.) – Six months.
[39] I must also consider the applicant’s request that I strike the responding material and grant default judgment. It is clear that similar remedies have been granted where warranted: see iTrade Finance Inc. v. Webworx Inc. (2005), 255 D.L.R. (4th) 748 (Ont. S.C.J.); State Farm Insurance Co. v. Brijlal, 2011 ONSC 652; and Macklem v. L’Ecuyer, 2010 ONSC 6382. In my view, such a sanction is appropriate here.
[40] There can be no doubt, in my view, that highly relevant documents have disappeared, and will never be made available to the applicant. Fourteen boxes of material were shipped to Mr. Bortolon. Five boxes were shipped from Mr. Bortolon to the applicant’s solicitors. This was part of a deal under which Mr. Regan made it clear that if Mr. Bortolon settled his claim, incriminating documents would be shipped to him and he could do what he wanted with them. As I noted in my original reasons for judgment, it is not difficult to connect the dots. The applicant will never be satisfied that it can obtain a fair hearing. This is entirely because of the actions of Mr. Regan and Mr. Bortolon.
[41] I do not accept the submission of 2365222 Ontario Limited that it is simply an innocent bystander. It claims to be another company operating out of the same premises as other companies in which Mr. Bortolon has an interest. Mr. Bortolon is a one-third shareholder. It is represented by the same solicitors as the other respondents. I do not accept that simply because it was incorporated after Mr. Regan ceased being the solicitor for Mr. Bortolon, any documents possessed by Mr. Regan would have no relevance to 2365222 Ontario Limited. Fundamentally, the position of the applicant is that Mr. Bortolon and the various companies with which he is associated have shuffled assets around so that it is difficult to know which corporation or entity owns different assets or runs which aspects of the business. Quite clearly, Mr. Regan could well have documents in his possession that would be relevant to the question of whether there is a pattern of conduct on the part of Mr. Bortolon and his associates that would show that 2365222 Ontario Limited, as well the other corporations and entities, have been engaging in schemes to make it difficult to know who owns what. I see no unfairness in dealing with 2365222 Ontario Limited on the same basis as the other respondents.
[42] In my view, this is an appropriate case to strike the responding material and to grant default judgment in favour of the applicant. The appropriate order shall issue. It there is any dispute at to the form and content of the order, I may be spoken to.
[43] In view of the very serious conduct of Mr. Bortolon and Mr. Regan, I consider that only a custodial penalty will suffice. I do not think it needs to be as long as some of the penalties canvassed in the cases I have mentioned, but it needs to be long enough to convey the message. The message is not only that court orders must be obeyed, it is that if compliance or non-compliance with a court order is bartered for some perceived personal advantage, the contemnor will face a very serious penalty indeed.
[44] On balance, I think an appropriate sentence for each of Mr. Bortolon and Mr. Regan is one of incarceration for a period of 90 days, and I so order. I have a signed a warrant of committal to that effect.
[45] I will entertain written submissions as to costs, not to exceed five pages, together with any supporting material. Mr. Frydenberg shall have five days, and each of Mr. LaFramboise and Mr. Esterbauer shall have five days to respond. Mr. Frydenberg shall have three days to reply.
Gray J.
Released: November 7, 2016
CITATION: Business Development Bank of Canada v. Cavalon Inc., 2016 ONSC 6825
COURT FILE NO.: 2454/14
DATE: 2016-11-07
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
BUSINESS DEVELOPMENT BANK OF CANADA
Applicant
– and –
CAVALON INC., 2365222 ONTARIO LIMITED, AUTOMETRIC AUTOBODY INC., 2145009 ONTARIO INC. and ROBERT FRANCIS BORTOLON also known as ROBERT BORTOLON
Respondents
REASONS FOR JUDGMENT
GRAY J.
Released: November 7, 2016