Tribecca Finance Corporation v. Tabrizi, 2018 ONSC 2577

COURT FILE NO.: CV-12-03165-00

DATE: 20180531

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Tribecca Finance Corporation and Yogesh Shah and Rita Shah, Plaintiffs

AND:

Haroutioun Tabrizi and Ani Tabrizi, Defendants

BEFORE: Petersen J.

COUNSEL: Daniel McConville, for the Plaintiffs

Kenneth Prehogan and Kayla Theeuwen, for the Defendants

HEARD: May 30, 2018

ENDORSEMENT

1This is a sentencing hearing in a civil contempt matter.

2The Plaintiff Tribecca Finance is a judgement creditor in this action. The Defendant, Haroutioun Tabrizi, is a judgement debtor.

3In my endorsement dated January 25, 2018 (2018 ONSC 486), I made orders of contempt against Mr. Tabrizi. I adjourned the penalty phase of the hearing to a later date in order to give him an opportunity to purge his contempt. I ordered that he could do so by directing his companies to pay Tribecca Finance $112,623 within 30 days.

JURISDICTIONAL ISSUE

4Mr. Tabrizi takes the position that I did not have jurisdiction to make a civil contempt order based on his wilful disobedience of Justice Donohue’s orders because her orders were for the payment of money. He submits that Rules 60.05 and 60.11(1) of the Rules of Civil Procedure effectively preclude contempt orders to enforce a court order for the payment of money. Forrest v. Lacroix Estate, (2000) 5728 (ONCA).

5I am functus officio with respect to the issue of Mr. Tabrizi’s contempt of Justice Donohue’s orders, but even if I were to accept his submission on this jurisdictional objection, my other order of contempt of court against him would still stand pursuant to Rule 60.18(5) of the Rules of Civil Procedure.

6Rule 60.18(5) states: “Where it appears from an examination [in aid of execution] … that a debtor has concealed or made away with property to defeat or defraud his or her creditors, a judge may make a contempt order against the debtor.” In my endorsement dated January 25, 2018, I found Mr. Tabrizi in contempt based on evidence arising from his examination in aid of execution (and answers to undertakings given at the examination). The evidence established that he was concealing income and moving assets in a deliberate effort to defeat his creditor. Tribecca Finance had been attempting to recover part of the judgement against Mr. Tabrizi through notices of garnishment served on Mr. Tabrizi’s companies. I found that Mr. Tabrizi made inter-company transfers, created a new company with his daughter as a front, and moved corporate assets out of the garnishee companies to the new company, all in a deliberate effort to defeat his creditor.

7Since there is a legitimate question about the correctness of my ruling with respect to Mr. Tabrizi’s contempt of Justice Donohue’s orders, I will not take his wilful disobedience of those orders into consideration in determining the appropriate sentence for his contempt. I will proceed to sentence Mr. Tabrizi for the contempt order made pursuant to Rule 60.18(5).

SENTENCING

8The Rules of Civil Procedure do not stipulate potential penalties for contempt under Rule 60.18(5). However, the parties agree that the range of penalties set out in Rule 60.11(5) is appropriate. The parties also agree that the jurisprudence developed under Rule 60.11 establishes relevant factors for consideration in imposing a sentence for contempt under Rule 60.18(5). I accept that this is a useful and appropriate framework for determining the sentence (if any) that should be imposed on Mr. Tabrizi.

9The jurisprudence makes clear that the primary purpose of a sentence for civil contempt is to coerce compliance in order to protect the rights of a private party. However, punishment (including deterrence and denunciation) has been recognized as a secondary purpose for sentencing in such cases, in order to ensure societal respect for the law and the courts. Boily v. Carleton Condominium Corp.145, 2014 ONCA 574, at para.29. The public law aspect of civil contempt proceedings must be reflected in the sanctions imposed. Business Development Bank of Canada v. Cavalon Inc., 2017 ONCA 663 at paras.76-81.

10The following are factors relevant to the determination of an appropriate sentence for civil contempt:

a) proportionality of the sentence to the gravity of the wrongdoing and the degree of responsibility of the contemnor;

b) the presence of aggravating or mitigating factors;

c) the similarity of the sentence to other sentences imposed on contemnors for contempt committed in similar circumstances;

d) denunciation of the wrongful conduct, promotion of a sense of responsibility in the contemnor, and deterrence (both general and specific); and

e) the reasonableness of a fine or incarceration.

Boily, supra, at para.90; Business Development Bank of Canada, supra, at paras.90-91; and Mohammed v. Anwar, 2018 ONSC 2437, at para.54.

11Mr. Tabrizi has purged his contempt by arranging for payments to be made to Tribecca Finance in the total amount of $112,623. The money was paid in three installments, the last of which was made on April 9, 2018, several weeks after the deadline imposed in my January 25, 2018 Order. Despite the delay, the full amount has been paid. There is therefore no need for a sanction to enforce Mr. Tabrizi’s compliance and protect the rights of Tribecca Finance.

12Mr. Tabrizi argues that no penalty is required to achieve the public interest objectives of sentencing because he has apologized to the court and he, his wife and his company Tabcon Limited have all been required to seek bankruptcy protection since making the payments to Tribecca Finance. He argues that he fully understands the consequences of his actions.

13The Plaintiff submits that the bankruptcy proceedings are part of Mr. Tabrizi’s intransigence and ongoing scheme to defeat Tribecca Finance’s efforts at enforcing judgement. It argues that the bankruptcy proceedings therefore constitute an aggravating rather than mitigating factor in sentencing Mr. Tabrizi.

14Mr. Tabrizi bears the onus of proving any mitigating factors on a balance of probabilities and Tribecca Finance bears the onus of proving aggravating factors. Korea Data Systems Co. v. Chiang, 2009 ONCA 3, at para.51.

15I am troubled by the timing of Mr. Tabrizi’s filing for bankruptcy on April 9, 2018, which was the deadline for compliance with a production order that I made on March 19, 2018, with which he has not complied (the filing for bankruptcy having automatically stayed all proceedings against him, other than this contempt sentencing hearing). I am also troubled by the fact that the Trustee in Bankruptcy for Mr. Tabrizi, Ms. Tabrizi and Tabcon Limited brought a motion returnable before the Court in Toronto today for an order approving a sale transaction between the Trustee and Tabcon Consulting Inc., the company that I found was created by Mr. Tabrizi for the purpose of transferring and concealing assets from his creditor, and which is effectively operated by Mr. Tabrizi with his daughter as a front. However, the evidence before me is insufficient to make a finding that the bankruptcy proceedings are proof of Mr. Tabrizi’s continued defiance and ongoing contumacious intent. The Tabrizis may have genuinely had no other options but to file for bankruptcy and the Toronto motion was brought by the Trustee, not Mr. Tabrizi. Without more evidence, I am not prepared to consider the bankruptcy proceedings as an aggravating factor in determine the appropriate sentence for Mr. Tabrizi’s contempt.

16Mr. Tabrizi’s purging of his contempt is a significant mitigating factor with respect to sentencing, but it does not justify no penalty being imposed. Boily, supra, at para.121. A meaningful sanction is still required to reflect the gravity of Mr. Tabrizi’s wilful misconduct, to denounce the misconduct, and to deter him and others from similar misconduct.

17The Plaintiff is not arguing for the imposition of a fine or a term of incarceration, which I agree would not be proportionate in this case.

18The Plaintiff suggests instead a suspended sentence with 200 hours of community service to be completed at the United Way, Blue Door Shelters or the Markham Food Bank. Mr. Tabrizi submits that, if any penalty is imposed, it should consist of no more than 75 hours of community service, to be performed over the course of six months.

19There are both aggravating and mitigating factors in this case.

20The mitigating factors include: Mr. Tabrizi has no record of prior criminal convictions or findings of civil contempt; he has taken steps to purge his contempt; and he has apologized to the court for his wrongful conduct. I do not consider his age and ill health as mitigating factors, since a jail sentence is not being considered, and he is not elderly.

21The aggravating factors include: Mr. Tabrizi’s misconduct was intentional and long-running; his conduct caused harm to Tribecca Finance; and although he has apologized to the court, he has not actually admitted any wrongdoing.

22Taking all of the above into consideration, I find that a proportionate and appropriate sentence in this case is volunteer community service at one or more recognized charities for a total of 75 hours over the next six months. I will not order a suspended sentence or probation, as I do not think supervision by a probation officer is required. Instead, I order that Mr. Tabrizi is to appear before me at 9:30 a.m. on Friday, November 30, 2018 with written confirmation of completion of his 75 hours of volunteer community service. If he satisfies this condition, no further sentence will be imposed.

Petersen J.

Date: May 31, 2018

COURT FILE NO.: CV-12-03165-00

DATE: 20180531

SUPERIOR COURT OF JUSTICE - ONTARIO

Tribecca Finance Corporation and Yogesh Shah and Rita Shah, Plaintiffs (Judgment Creditors)

AND:

Ani Tabrizi and Haroutioun Tabrizi, Defendants (Judgment Debtors)

AND:

Tabcon Property management Inc., Tabcon Developments Inc., Tabcon Engineering, a division of Tabcon Limited, Tabcon Limited and 2051251 Ontario Inc., (Garnishees)