CITATION: L. Morreale Consulting Professional Corporation v. Frank Manieri, 2016 ONSC 7048

COURT FILE NO.: CV-14-502293

DATE: 20161114

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: L. Morreale Consulting Professional Corporation, Plaintiff (Moving Party)

AND:

Frank Manieri, Defendant (Respondent)

BEFORE: Madam Justice Kristjanson

COUNSEL: A. Colangelo, for the Plaintiff/Moving Party

Frank Manieri, In Person

HEARD: November 10, 2016

ENDORSEMENT

[1] The Plaintiff L. Morreale Consulting Professional Corporation (“Professional Corporation”) brings this motion pursuant to Rule 60.11(1) of the Rules of Civil Procedure for a finding that the respondent, Mr. Manieri, is in contempt of court for failing to comply with two court orders. I find that Mr. Manieri is in contempt of court for breaching the order of Master Graham dated January 18, 2016 and the order of Justice Lederer dated April 29, 2016. I have issued a further order directing production of financial documents and attendance at an examination in aid of execution, which will give Mr. Manieri the opportunity to purge his contempt before the penalty hearing scheduled for January 25, 2017.

FACTS

[2] The Professional Corporation is a group of paralegals retained by Mr. Manieri to act on his behalf on an appeal before the Workplace Safety and Insurance Board (“WSIB”). The appeal was successful. Mr. Manieri was awarded $396,893.02. Based on the contingency fee arrangement entered into with the Professional Corporation, the fee was to be $112,120.17. Mr. Manieri did not pay the Professional Corporation, and it sued for judgment.

[3] The Professional Corporation obtained judgment against Mr. Manieri on September 4, 2015 in the amount of $112,112.27 plus costs of $3,208.04.

[4] On October 21, 2015, Mr. Manieri was personally served with notice of examination in aid of execution to be conducted November 30, 2015. Mr. Manieri did not attend the examination.

[5] The Professional Corporation brought a motion before Master Graham to compel the attendance of Mr. Manieri at an examination in aid of execution. The Professional Corporation personally served Mr. Manieri with the motion materials, but he did not attend at the motion. By order dated January 18, 2016, Master Graham ordered Mr. Manieri to attend for an examination in aid of execution on or before February 29, 2016, upon service of a Notice of Examination and a copy of Master Graham’s order. The Master awarded costs in the amount of $2,234.58.

[6] On January 26, 2016, Mr. Manieri was personally served with a notice of examination returnable February 25, 2016 as well as a copy of Master Graham’s order. Mr. Manieri did not attend at the examination in aid of execution as ordered by Master Graham.

[7] The Professional Corporation returned this matter before Justice Lederer on April 29, 2016 on a contempt motion. On April 29, 2016, Justice Lederer made an Order directing that by May 30, 2016, Frank Manieri provide full documentary disclosure, including but not limited to bank statements, cancelled cheques, etc., disclosing where the $396,893.02 received from the WSIB in or around December, 2014 was deposited or cashed, and how these funds were subsequently disbursed. Justice Lederer further ordered that Mr. Manieri attend at an examination in aid of execution on or prior to June 15, 2016, upon being personally served with the order and the accompanying endorsement. Justice Lederer ordered costs of the motion in the amount of $4,396.00 payable forthwith.

[8] In his endorsement, Justice Lederer held as follows:

I wish to make clear and repeat the Court cannot and will not tolerate its orders being ignored and not complied with.

As I perceive it, this is the defendant’s last chance. If he does not deliver the material and does not appear at the examination it is likely that on the next appearance a direction will go to the police that he be picked up and incarcerated until he can be brought before a Justice of this Court.

[9] On May 4, 2016 Mr. Manieri was personally served with the Order and endorsement of Lederer J. and a Notice of Examination in aid of execution returnable June 10, 2016.

[10] Mr. Manieri did not comply with the Order of Lederer. J. He did not produce the documentary disclosure by May 30, 2016 as required. He did not attend the examination in aid of execution on June 10, 2016.

[11] The contempt motion proceeded on November 10, 2016.

CONTEMPT

The Test for Contempt

[12] The Supreme Court of Canada in Carey v. Laiken, 2015 SCC 17 established that there are three elements to a finding of civil contempt, which must be established beyond a reasonable doubt:

(1) The order alleged to have been breached must state clearly and unequivocally what should and should not be done (para.33);

(2) The party alleged to have breached the order must have had actual knowledge of the order, although knowledge may be inferred or imputed on the grounds of wilful blindness (para.34); and

(3) The party must have intentionally done the act that the order prohibits, or intentionally failed to do the act that the order compels (para.35).

Application of the Contempt Test

[13] Mr. Manieri breached the order of Master Graham to attend on an examination in aid of execution despite being personally served with the Notice of Examination and the Order of Master Graham.

[14] Mr. Manieri breached the Order of Justice Lederer to produce the financial documentary disclosure and to attend the examination in aid of execution, although personally served with the Notice of Examination and the Order and endorsement of Justice Lederer.

[15] Mr. Manieri attended in court today. He stated that he had been hospitalized last year. However, I find that he was personally served at home on each attendance by the process server, October 21, 2015, January 26, 2016, and May 4, 2016, and he did not establish that any period of hospitalization prevented compliance with the court orders. He stated that he had been suffering depression, but tendered no medical evidence, and did not establish that this made him unable to attend the missed examinations in aid of execution nor the provision of financial records as ordered.

[16] Mr. Manieri did not claim any lack of knowledge of the court orders. He stated that in no way did he mean to upset the cart, and indicated that from this point forward, he will do whatever needs to be done. I sincerely hope that this is the case. However, Justice Lederer had clearly informed Mr. Manieri that compliance with his order was Mr. Manieri’s last chance. Mr. Manieri spurned his last chance, and intentionally disobeyed two court orders.

[17] I find that the Professional Corporation has established all three elements of civil contempt beyond a reasonable doubt. I find that Mr. Manieri is in contempt of the clear orders of Master Graham and Justice Lederer, of which he had actual knowledge. The failures to attend the examinations in aid of execution and the failure to produce documents as ordered were clearly intentional. As a judgment debtor he essentially “took the money and ran”, and has subsequently refused to obey court orders.

[18] Compliance with court orders is essential to maintaining the rule of law. Court orders must be enforceable, and when parties subject to court orders spurn those orders, they undermine the basis of our system of justice. Contempt of court is part of the court’s inherent jurisdiction to ensure that orders are obeyed. While the contempt power is discretionary, and should be used “cautiously and with great restraint” (Carey, at para. 36), I exercise my discretion in these circumstances to find Mr. Manieri in contempt.

The Penalty Phase and Purging Contempt

[19] Contempt proceedings are generally bifurcated, with liability determined at the first hearing, and the penalty determined on the second hearing. The Court of Appeal has held that once a contempt finding is made, “the matter is adjourned to provide the contemnor an opportunity to purge the contempt and prepare for the sentencing portion of the process. Any action taken by a contemnor to purge his or her contempt may serve as a mitigating factor in sentencing”: Boily v. Carleton Condominium Corp. 145, 2014 ONCA 574, at para. 121. The Supreme Court of Canada has held that a judge may properly revisit an initial contempt finding “where the contemnor subsequently complies with the order or otherwise purges his or her contempt”: Carey at para. 66.

[20] I have scheduled the penalty hearing for January 25, 2017. In order to allow Mr. Manieri to purge his contempt before that hearing, I direct as follows:

(1) On or before December 9, 2016, Mr. Manieri shall provide full documentary disclosure disclosing where the $396,893.02 received from the WSIB in or around December, 2014 was deposited or cashed and how these funds were subsequently disbursed. This disclosure is to include, but is not limited to:

(a) Bank statements from all banks and financial institutions from the date when funds were received from the WSIB to the present day; and

(b) Copies of cheques and cancelled cheques disclosing the receipt of the funds received from the WSIB and any subsequent disbursement of these funds.

(2) Mr. Manieri is to attend an examination in aid of execution on December 15, 2016, following service of a Notice of Examination to be served no later than November 30, 2016.

[21] If Mr. Manieri does not receive the Notice of Examination, or attempts to evade service, I caution that he should not simply assume that he does not need to attend. If he does not receive a Notice of Examination by November 30 setting out the date and place, then he is to call the lawyers at Lento Professional Corporation to obtain the information about date and place.

[22] Similarly, if Mr. Manieri has any difficulties obtaining bank records, he is to contact the lawyers at Lento Professional Corporation to explain the steps he has taken and any difficulties encountered. They have a direction they may exercise to obtain the requisite information. Cooperation in terms of fulfilling the terms of my order will be relevant to the penalty phase.

[23] I draw Mr. Manieri’s attention to Rule 60.11(5), which sets out the type of penalties which I may impose at the penalty hearing. I may direct that Mr. Manieri:

(a) be imprisoned for such period and on such terms as are just;

(b) be imprisoned if he fails to comply with a term of the order;

(c) pay a fine;

(d) do or refrain from doing an act;

(e) pay such costs as are just; and

(f) comply with any other order that I consider necessary, including leave to issue a writ of sequestration under Rule 60.09 against Mr. Manieri’s property.

[24] I also draw Mr. Manieri’s attention to Rule 60.11(8) of the Rules of Civil Procedure, which provides that a person found guilty of contempt may purge or be discharged from his or her contempt, by complying with the orders. In this case, purging contempt requires Mr. Manieri to comply with my order, to produce the documents and attend the examination in aid of execution. I have told Mr. Manieri that he will be required to answer questions on the examination, and he may be required to provide further relevant information arising from questions asked at the examination.

[25] The Professional Corporation is to serve and file any materials upon which it seeks to rely in the penalty phase by January 4, 2017. Mr. Manieri is to serve and file his materials by January 18, 2017. The hearing will take place on January 25, 2017 at 2:15 p.m. at the 361 University Avenue Court House.

COSTS

[26] Costs are often awarded on a substantial indemnity basis in contempt matters. The reason is stated by Nordheimer J. in 1307347 Ontario Inc. v. 1243058 Ontario Inc., 2001 CarswellOnt 492, [2001] O.J. No. 585 (Sup. Ct.), at para. 5:

There ought to be something approaching a complete indemnity to the successful party in such motions since to do otherwise would involve some cost or punishment to the successful party arising solely out of the conduct of the other party in violating the court order.

[27] I agree with Goldstein J. in Astley v. Verdun, 2013 ONSC 6734 where he held at para. 56 that: “there is a rebuttable presumption that substantial indemnity costs are appropriate in a contempt of court case. The presumption may be rebutted where the contemnor is suitably contrite, has attempted to purge his or her contempt, has taken steps to minimize costs incurred by the other party, and the contempt itself is towards the lower end of the “flagrant and wilful” scale.”

[28] I have considered the factors set out in Rule 57.01, the conduct of Mr. Manieri in the proceedings to date, his reasonable expectations based on his conduct, and what is fair and reasonable in the circumstances, and set costs on a substantial indemnity basis in the amount of $4,434.40, fixed and payable within 30 days.

[29] I note that there are costs awards outstanding from the Order of Master Graham ($2,234.58) and the Order of Justice Lederer ($4,396.00). Mr. Manieri must also pay these costs awards, which have been ordered by the court.

Kristjanson J.

Date: November 14, 2016