Court File and Parties

COURT FILE NO.: CV-16-549951 DATE: 20180717

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Allied Properties REIT, 460 King Street West Inc. and 1301585 Ontario Limited Applicants

– and –

1064249 Ontario Inc. Respondent

Counsel: David Reiter and Meghan Cowan, for the Applicant Christine Muir, for the Respondent

HEARD: July 17, 2018

Before: Justice Kristjanson

JUDGMENT

Background Facts: Contempt and Purging of the Contempt

[1] These are my reasons on the sanction hearing and sentencing of 1064249 Ontario Inc. (“106 Ontario”). In my reasons of October 26, 2016, I ordered 106 Ontario to cease operating a parking lot at 464 King Street West (the “Property”), which I found to be operating in contravention of City of Toronto Zoning By-Law 438-86 (the “Injunction”).

[2] 106 Ontario did not comply with that Order. The parking lot continued to operate in the face of the Injunction from October 26, 2016 through to March 31, 2017, when I made a finding that 106 Ontario was in contempt of my Order.

[3] The parking lot was shut down on April 2, 2017, the earliest practical date. The parking lot was chained, the credit card slot was covered, the parking booth was closed, and the meter machine was subsequently removed. The contempt was purged at that time, and the Order was not breached thereafter. There are no ongoing concerns regarding potential future contempt, as 106 Ontario no longer owns the Property.

Monies Earned from Operating the Parking Lot

[4] 106 Ontario owned the Property, and leased it to 2449898 Ontario Inc. (“244 Ontario”). 244 Ontario operated the lot at the Property. Mr. Faisal Mehboob controlled and was responsible for both corporations. Gross earnings from the lot during the period of contempt, October 26, 2016 to March 31, 2017, were approximately $47,000.

[5] The affidavit of Mr. Mehboob establishes that the expenses of operating the lot during that time totaled approximately $40,000, broken down as follows:

(a) $25,000 was paid by 244 Ontario, on behalf of 106 Ontario, to the City of Toronto in relation to the property tax for the Property; and

(b) $15,000 was paid out in additional expenses, including in legal fees incurred responding to the Injunction and other expenses related to the operation of the parking lot.

[6] The remaining gross profit, in the amount of approximately $7,000, stayed with 244 Ontario; however, subsequent to the shutdown of the lot on April 2, 2017, it incurred additional legal fees for the appeal of the Injunction, which was unsuccessful. Mr. Faisal Mehboob personally incurred over $15,000 in legal fees responding to the contempt proceedings related to the Injunction.

Joint Position on Sentencing

[7] The parties jointly submit that a fine in the amount of $25,000 is an appropriate penalty. I agree. If a $25,000 fine is imposed no profit will have been realized by the contemnor from its contempt, and the individual behind the contempt will have realized only a significant loss from the contempt. Pursuant to section 143(2) of the Courts of Justice Act, a fine for contempt does not go to the plaintiff but to the Crown.

[8] These financial repercussions are additional to the stigma associated with the finding of contempt against 106 Ontario. The contempt was purged immediately upon order of the Court. The individual behind the contempt, Mr. Faisal Mehboob, has expressed his remorse and provided an apology to the Court for his conduct.

Sentencing Principles

[9] Rule 60.11(5) of the Rules of Civil Procedure, RRO 1990, Reg. 194, gives the Court broad discretion to fashion a remedy for contempt. The Court may make such order, as is just, that the contemnor:

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

(b) be imprisoned if the person 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 the judge considers necessary.

[10] The purpose of a penalty for civil contempt is to enforce compliance with the court order at issue, and to ensure that orders of the courts, both the one in issue and more generally, are respected: Boily v. Carleton Condominium Corporation 145, 2014 ONCA 574, at para 79 (Boily). Deterrence, specific and general, is the most important objective of a contempt penalty. The sentence must “repair the wound and denounce the conduct”: Boily, at para. 105.

[11] In determining the appropriate sentence for contempt, the Court of Appeal in Boily set out relevant factors as follows at para. 90:

(a) the proportionality of the sentence to the wrongdoing;

(b) the presence of mitigating factors;

(c) the presence of aggravating factors;

(d) deterrence and denunciation;

(e) the similarity of sentences in like circumstances; and

(f) the reasonableness of a fine or incarceration.

Application of Sentencing Principles

[12] A sentence should be increased or reduced to account for aggravating or mitigating factors surrounding the contempt or the contemnor. Purging the contempt and providing an apology are mitigating factors which may reduce the sentence: Landmover Trucks Inc. v. Bhullar, 2017 ONSC 3196, at paras. 42 and 43 (Landmover). These factors apply here.

[13] Monetary penalties should not be a licence fee for further disobedience, and should be of a sufficient amount that the fine not be seen as the cost of doing business: Landmover, at paras. 32 and 48. Contemnors should not profit from their contempt: West Lincoln (Township) v. Chan, 2001 CarswellOnt 1885, at para. 33. Here, the amount of the fine removes the profit from the contempt.

[14] The parties jointly submit, and I agree, that the facts set out above, taken together, address the material sentencing principles of specific and general deterrence, denunciation, and remove the profit from the contempt. I find that the fine is reasonable and proportional, and is a sentence fit in the circumstances.

[15] I order that 1064249 Ontario Inc. pay to the Provincial Treasurer a fine of $25,000.00, within 30 days.

Kristjanson J.

Released: July 17, 2018

COURT FILE NO.: CV-16-549951 DATE: 20180717

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Allied Properties REIT, 460 King Street West Inc. and 1301585 Ontario Limited Applicants – and – 1064249 Ontario Inc. Respondent

JUDGMENT

Kristjanson J.

Released: July 17, 2018