COURT FILE NO.: CV-10-365-00 DATE: 2019-04-09
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
GERALD WITILUK and THE TRUSTEES OF THE GERALD WITILUK FAMILY TRUST Plaintiffs
Mr. M. McWilliams, and Mr. C. Shammas for the Plaintiffs
- and -
JACK WITILUK, JEFFREY WITILUK, THE TRUSTEES OF THE JACK WITILUK FAMILY TRUST, DENTRO HOLDING COMPANY LTD., BALMORAL PARK AUTO INC., 539159 ONTARIO LIMITED, JAKE’S SPEED SHOP INC. and PHASE 2 VENTURES INC. Defendants
Mr. M. Holervich, for the Defendants
HEARD: January 29 and March 29, 2019, at Thunder Bay, Ontario
The Honourable Mr. Justice F. B. Fitzpatrick
Judgment On Motion
1The plaintiffs, Gerald Witiluk (“Gerald”) and the trustees of the Gerald Witiluk Family Trust (the “Trust”), seek an order that the defendants, Jack Witiluk (“Jack”), Jeffrey Witiluk (“Jeff”), Ryan Witiluk (“Ryan”), the trustees of the Jack Witiluk Family Trust (the “Jack Trust”), Dentro Holding Company Ltd. (“Dentro”), Balmoral Park Auto Inc. (“Balmoral”), 539159 Ontario Limited (“539”), Jake’s Speed Shop Inc. (“Jake’s”), and Phase 2 Ventures Inc. (“Phase 2”) are in contempt of orders this court made on March 21, 2013, October 13, 2016, and August 2, 2018.
Background
2The plaintiffs commenced this action in 2010 seeking, among other things, a buy-out of their respective shares in the five corporate defendants. I was appointed the case management judge for this matter in February 2015. Since that time, the parties have made 15 attendances before me, the vast majority of which focused on the plaintiffs’ requests for disclosure and the production of a further and better affidavit of documents on the part of the defendants. I have made several endorsements arising out of those attendances. Among other things, those endorsements set out the progress, or lack thereof, on this file and, in particular, related to the issue of documentary disclosure. Oral examinations for discovery have not yet occurred.
3This action involves the plaintiffs’ interests in five corporations: Dentro, Balmoral, 539, Jake’s and Phase 2 (collectively the “Corporate Defendants”). The Corporate Defendants’ businesses can generally be described as follows:
Balmoral: operates Balmoral Park Acura, an Acura car dealership operating in the City of Thunder Bay;
Phase 2: operates Thunder Bay Mitsubishi, a Mitsubishi car dealership operating in the City of Thunder Bay;
Jake’s: operates J & J Sports, a recreational vehicle dealership selling boats, motors, motorcycles, snowmobiles, and ATVs in the City of Thunder Bay;
Dentro: a real estate holding company that owns all of the real estate from which Balmoral and Phase 2 operate;
539: a holding company that provides financing to the other Corporate Defendants. 539 is a parent company to Jake’s, which is 539’s wholly owned subsidiary. 539 owns the premises from which Jake’s operates.
4Gerald was a director and officer of Dentro, Balmoral, 539, and Jake’s from each companies’ inception until 2011, and currently, he owns 45% of the Dentro shares, the Balmoral shares, and the 539 shares. The Trust is a 50% shareholder in Phase 2.
5Gerald’s brother, Jack, is a director and officer of Dentro, Balmoral, 539, and Jake’s. Jack owns 55% of the Dentro shares, the Balmoral shares, and the 539 shares. The Jack Trust is a 50% shareholder in Phase 2. Jack’s son, Jeff, is the General Manager and sole director of Phase 2. Jack’s son, Ryan, is the General Manager of Balmoral and a director of Dentro, Balmoral, 539, and Jake’s.
6There have been three specific orders requiring the defendants to produce documents to the plaintiffs:
a) The order of the Shaw J. dated March 21, 2013 (the “Shaw Order”);
b) The endorsement of Fitzpatrick J. dated October 13, 2016 (the “First Fitzpatrick Order”); and,
c) The endorsement and Order of Fitzpatrick J. dated August 2, 2018 (the “Second Fitzpatrick Order”).
7The First Fitzpatrick Order was made on consent and with the input of counsel for the defendants.
8The Second Fitzpatrick Order was made partially on consent and partially after a contested hearing on the production of certain documents. It is worth noting that at paragraph 29 of the endorsement that led to the Second Fitzpatrick Order, I wrote the following:
[29] I decline to make a “last chance” order at this point in the litigation because I am of the view that the defendants have been making bona fide efforts to produce relevant documents to date. I have come to this conclusion based on the numerous case conferences that have been devoted to this issue. As the years have passed, since the litigation commenced, production issues have become more complicated. The failure to resolve the case rests equally on both parties at this point. Thus time marches on and disclosure continues to be complex. Based on the evidence that has been put before the Court to date, I would not be inclined to either find the defendants in contempt or strike their pleadings based on their actions concerning disclosure. Therefore I see no need for “last chance” language in the body of the present order. I think it would tend to discourage the cooperative spirit that has led to the majority of the present order being agreed to.
9The plaintiffs now seek a finding that the defendants are in contempt of the First Fitzpatrick Order and the Second Fitzpatrick Order. The defendants have produced various affidavits of documents and productions to date, which disclose approximately 3,500 relevant documents. Also, since this motion has been brought, the defendants have made additional productions consistent with the previous orders.
The Guiding Legal Principles
10Counsel for the parties agree that the test for civil contempt, as well as a succinct overview of the Canadian common law of civil contempt, was articulated by the Supreme Court of Canada in the decision Carey v Laiken, 2015 SCC 17, [2015] 2 S.C.R. 79, at paras. 30-38, where Cromwell J. wrote:
(2) The Canadian Common Law of Civil Contempt
30 Contempt of court “rest[s] on the power of the court to uphold its dignity and process... . The rule of law is directly dependent on the ability of the courts to enforce their process and maintain their dignity and respect”: United Nurses of Alberta v. Alberta (Attorney General), 1992 SCC 99, [1992] 1 S.C.R. 901, at p. 931. It is well established that the purpose of a contempt order is “first and foremost a declaration that a party has acted in defiance of a court order”: Pro Swing Inc. v. Elta Golf Inc., 2006 SCC 52, [2006] 2 S.C.R. 612, at para. 35, cited in Bell ExpressVu Limited Partnership v. Torroni, 2009 ONCA 85, 94 O.R. (3d) 614, at para. 20.
31 The common law has developed to recognize two forms of contempt of court: criminal contempt and civil contempt. The distinction, which the parties to this appeal accept, rests on the element of public defiance accompanying criminal contempt: see, e.g., United Nurses, at p. 931; Poje v. Attorney General for British Columbia, 1953 SCC 34, [1953] 1 S.C.R. 516, at p. 522. With civil contempt, where there is no element of public defiance, the matter is generally seen “primarily as coercive rather than punitive”: R. J. Sharpe, Injunctions and Specific Performance (2nd ed. (loose-leaf)), at para 6.100. However, one purpose of sentencing for civil contempt is punishment for breaching a court order: Chiang (Trustee of) v. Chiang, 2009 ONCA 3, 305 D.L.R. (4th) 655, at para. 117. Courts sometimes impose substantial fines to match the gravity of the contempt, to deter the contemnor's continuing conduct and to deter others from comparable conduct: Sharpe, at para 6.100.
32 Civil contempt has three elements which must be established beyond a reasonable doubt: Prescott-Russell Services for Children and Adults v. G. (N.) (2006), 2006 ONCA 81792, 82 O.R. (3d) 686 (C.A.), at para. 27; College of Optometrists, at para. 71; Bhatnager v. Canada (Minister of Employment and Immigration), 1990 SCC 120, [1990] 2 S.C.R. 217, at pp. 224-25; Jackson v. Honey, 2009 BCCA 112, 267 B.C.A.C. 210, at paras. 12-13; TG Industries Ltd. v. Williams, 2001 NSCA 105, 196 N.S.R. (2d) 35, at paras. 17 and 32; Godin v. Godin, 2012 NSCA 54, 317 N.S.R. (2d) 204, at para. 47; Soper v. Gaudet, 2011 NSCA 11, 298 N.S.R. (2d) 303, at para. 23. These three elements, coupled with the heightened standard of proof, help to ensure that the potential penal consequences of a contempt finding ensue only in appropriate cases: Bell ExpressVu, at para. 22; Chiang, at paras. 10-11.
33 The first element is that the order alleged to have been breached “must state clearly and unequivocally what should and should not be done”: Prescott-Russell, at para. 27; Bell ExpressVu, at para. 28, citing with approval Jaskhs Enterprises Inc. v. Indus Corp. [2004 CarswellOnt 4036 (Ont. S.C.J.)] 2004 ONSC 32262, at para. 40. This requirement of clarity ensures that a party will not be found in contempt where an order is unclear: Pro Swing, at para. 24; Bell ExpressVu, at para. 22. An order may be found to be unclear if, for example, it is missing an essential detail about where, when or to whom it applies; if it incorporates overly broad language; or if external circumstances have obscured its meaning: Culligan Canada Ltd. v. Fettes, 2010 SKCA 151, 326 D.L.R. (4th) 463 (Sask. C.A.), at para. 21.
34 The second element is that the party alleged to have breached the order must have had actual knowledge of it: Bhatnager, at p. 226; College of Optometrists, at para. 71. It may be possible to infer knowledge in the circumstances, or an alleged contemnor may attract liability on the basis of the wilful blindness doctrine ( ibid. ).
35 Finally, the party allegedly in breach must have intentionally done the act that the order prohibits or intentionally failed to do the act that the order compels: Sheppard, Re (1976), 1976 ONCA 710, 12 O.R. (2d) 4 (Ont. C.A.). at p. 8. The meaning of this element is one of the main points in contention on appeal and I will turn to consider it in more detail momentarily.
36 The contempt power is discretionary and courts have consistently discouraged its routine use to obtain compliance with court orders: see, e.g., Hefkey v. Hefkey, 2013 ONCA 44, 30 R.F.L. (7th) 65 (Ont. C.A.), at para. 3. If contempt is found too easily, “a court's outrage might be treated as just so much bluster that might ultimately cheapen the role and authority of the very judicial power it seeks to protect”: Centre commercial Les Rivières ltée c. Jean bleu inc., 2012 QCCA 1663 (C.A. Que.), at para. 7. As this Court has affirmed, “contempt of court cannot be reduced to a mere means of enforcing judgments”: Vidéotron ltée c. Industries Microlec produits électroniques inc., 1992 SCC 29, [1992] 2 S.C.R. 1065 (S.C.C.), at p. 1078, citing Daigle c. St-Gabriel de Brandon (Paroisse) 1991 QCCA 3806, [1991] R.D.J. 249 (C.A. Que.). Rather, it should be used “cautiously and with great restraint”: TG Industries, at para. 32. It is an enforcement power of last rather than first resort: Hefkey, at para. 3; St. Elizabeth Home Society v. Hamilton (City), 2008 ONCA 182, 89 O.R. (3d) 81 (Ont. C.A.), at paras. 41-43; Centre commercial Les Rivières ltée, at para. 64.
37 For example, where an alleged contemnor acted in good faith in taking reasonable steps to comply with the order, the judge entertaining a contempt motion generally retains some discretion to decline to make a finding of contempt: see, e.g., Morrow, Power v. Newfoundland Telephone Co. (1994), 1994 NLCA 9723, 121 Nfld. & P.E.I.R. 334 (Nfld. C.A.), at para. 20; TG Industries, at para. 31. While I prefer not to delineate the full scope of this discretion, given that the issue was not argued before us, I wish to leave open the possibility that a judge may properly exercise his or her discretion to decline to impose a contempt finding where it would work an injustice in the circumstances of the case.
(3) The Required “Intent”
38 It is well settled in Canadian common law that all that is required to establish civil contempt is proof beyond a reasonable doubt of an intentional act or omission that is in fact in breach of a clear order of which the alleged contemnor has notice: Prescott-Russell, at para. 27; College of Optometrists, at para. 71; Sheppard, at p. 8; TG Industries, at paras. 17 and 32; Bhatnager, at pp. 224-25, Sharpe, at ¶ 6.190. The Court of Appeal followed this approach. As it noted, to require a contemnor to have intended to disobey the order would put the test “too high” and result in “mistakes of law [becoming] a defence to an allegation of civil contempt but not to a murder charge” (Carey v. Laiken, 2013 ONCA 530 (Ont. C.A.), at para. 59). Instead, contumacy or lack thereof goes to the penalty to be imposed following a finding of contempt: para. 62; see also Sheppard and Sharpe, at ¶6.200.
11Counsel for the parties agree there is no issue that parts one and two of the test are satisfied here. That is, the two orders at issue clearly and unequivocally outline what should and should not be done, and the defendants had clear knowledge of both orders.
12The issue on this motion is whether the defendants have intentionally failed to produce certain documents for which the orders compel production.
13The plaintiffs also point to a line of authority that holds that actions purging contempt in the face of a motion for such relief does not prevent the court from making a finding of contempt. The plaintiffs rely on the decision of Conway J. in Peach Films Pty. Ltd v. Cinemavault Releasing Inc., (2008) 170 A.C.W.S. (3d) 290 (ONSC), where, at para. 16, she stated:
[16] Even if the contemptuous acts have ceased, or the contemnor has purged his contempt, the court still has jurisdiction to consider and punish for contempt. The purging of contempt is merely a mitigating factor to consider when determining an appropriate sanction: Re Ajax and Pickering General Hospital and Canadian Union of Public Employees (1981), 1981 ONCA 1849, 35 O.R. (2d) 293 (C.A.) at page 298.
Position of the Parties
14The plaintiffs submit that the defendants’ breached the two orders in the following manner:
a) The defendants intentionally failed to produce all the documents required by the First Fitzpatrick Order before the court ordered deadline of November 4, 2016, and still have not produced the current in-force agreement between Honda and Jake’s;
b) The defendants breached the Second Fitzpatrick Order by intentionally failing to produce any documents by September 3, 2018, and failing to produce a further and better affidavit of documents by September 30, 2018; and,
c) The defendants continue to be in breach of the Second Fitzpatrick Order by intentionally failing to produce several categories of documents required by the Second Fitzpatrick Order.
15The plaintiffs have placed before the court a relatively long list of examples of conduct on the part of the defendants that they argue prove beyond a reasonable doubt that the defendants intentionally failed to produce the documents at issue and are therefore in contempt of court orders. Summarizing this conduct, the plaintiffs’ submit:
a) Jack, Jeff, and Ryan all had access to relevant books and records of the defendant Corporations throughout this litigation. Jack, Jeff, and Ryan had a list of what the plaintiffs saw as outstanding productions as of May 22, 2018;
b) Jeff admitted on cross examination that he knew what documents the plaintiffs were seeking as of August 2, 2018, and that most of the documents subsequently produced were in the defendants’ possession as of September 3, 2018;
c) The defendants failed to produce a single document between August 2, 2018, and September 3, 2018, and have not explained why;
d) The defendants failed to produce the supplementary affidavit of documents until late October 2018;
e) During a case conference on October 26, 2018, the defendants, through counsel, represented to the court that they were fully compliant with the two production orders at issue when in fact they were not compliant. This was proven because, despite that representation, in response to the motion for contempt, the defendants continued to produce documents from the two production orders as required, and this production continued up to and including January 25, 2019, and February 5, 2019;
f) The defendants’ conduct has not been in good faith. Jeff admitted on cross examination that he believes the plaintiffs are “evil,” and Ryan discussed Jeff’s evidence with him immediately before he was cross-examined, suggesting some collusion to tailor his evidence;
g) The defendants have produced a late document that indicates they have engaged in oppressive conduct by making dividend payments to Jeff and Ryan when in fact Jeff and Ryan are not shareholders of the defendant corporations making the payments.
16The defendants submit that they have complied in large part with both orders, that they have not intentionally breached any court order, and that, in any event, the plaintiffs have not proved contempt beyond a reasonable doubt. The defendants have specific answers for the six categories of documents that the plaintiffs say are still unaccounted for as of the conclusion of the argument of this motion. In the main, the defendants say that their conduct may not have been perfect, but it was not contemptuous, and in fact, their actions have demonstrated good faith in attempting to comply and indeed actually complying with the production orders.
Disposition
17In determining this motion, I am ultimately mindful of Cromwell J.’s direction in Carey v. Laiken, at paras. 36-37. The plaintiffs’ right to an order for contempt is not “automatic” if they have proven beyond a reasonable doubt an intentional act not to comply with a court order. I have discretion to refuse such an order if an injustice will occur. I must also consider issues of proportionality and attempt to impose obligations on the parties that will secure the just, most expeditious, and least expensive determination of this proceeding on its merits. All of this leads me to exercise my discretion in favour of the defendants and to dismiss the plaintiffs’ motion.
18I do so for the following reasons.
19From my position as case management judge, I have a perspective that is more informed than would ordinarily be the case in a motion of this type. I have now served in that capacity for almost four years. Four years is one year short of the now five years that the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, expect a case to go from start to finish or risk being dismissed for delay. This case has been going on since 2010. I have made multiple endorsements on this file. I have been actively engaged with the parties and their counsel in trying to move this matter forward. I have directed the parties to seek directions through the more economical vehicle of case conferences rather than bringing formal motions. The production orders upon which the plaintiffs rely were not the first round of productions in this case. A site visit was ordered. Many documents were produced without the need for the orders.
20The context of this litigation is important in considering the merits of the plaintiffs’ motion for contempt. This is an oppression remedy case in a closely held family business. The business is multi-faceted, having a number of retail locations. Together, the businesses represent a significant enterprise for the economy of Thunder Bay. However, the companies are not part of a multi-national conglomerate.
21The fact that the individual members of the family, now on opposite sides of litigation, do not like each other is evident to me from their interactions, which I have had the opportunity to observe as the result of my conducting some 15 case conferences on this file. Parties to civil litigation do not have to like each other. They do have to be “civil” and abide by the Rules of Civil Procedure. The Rules of Civil Procedure, in the finest tradition of this country, provide for a great deal of latitude to deal pragmatically, rather than dogmatically, with problems in civil cases as they present themselves.
22This litigation is being conducted in a particular way because it is an oppression case. An oppression case has a unique quality in so far as the situation confronting a trial judge can be more fluid than in a regular civil action. In an oppression case conduct is assessed over a period of time, but ultimately, a trial judge has to pick a particular point in time to assess value. In this litigation, there has been no question that the plaintiffs will be entitled to either have their shares purchased or the entire business will be wound up and the proceeds will go to the shareholders, including the plaintiffs. As such, there is no automatic or patently obvious event or even series of events – like a car crash, a wrongful dismissal, or a specific breach of contract – that can be said to have definitively crystalized the rights of the parties as is the case with most civil litigation matters. In my view, one of the most critical issues for resolution at the trial of this matter will be the valuation date of the plaintiffs’ shares. That valuation issue is now, by virtue of how long this litigation has gone on and the stage the litigation is at now, very much a moving target.
23Here, thus far, the parties have yet to formally identify a valuation date for the shares at issue. This valuation date is critical to the case and has defined how the litigation has been conducted. It has made this litigation complex. The plaintiffs’ valuator, Mr. Low, had initially structured his request for documents so he could provide a valuation of the shares of the various companies around an August 2016 valuation date. That date was picked, not surprisingly in 2016. It has now been expanded to 2017. We are now two years past that date. A trial date is not in the foreseeable future. It is foreseeable that, by the time this matter gets to trial, hopefully in 2020 or 2021, the 2016 or 2017 documents may be irrelevant to the valuations put before the court.
24Defendants’ counsel argues that, even if I find that the remaining documents have not been produced, even for a 2016 valuation, their value is minimal. He uses the example of the request to produce projections for Jakes in the 2016/2017 fiscal year. By now, in 2019, that company has actual economic numbers indicating performance. The projections are of minimal value to an actual valuation. They might be relevant to assess the credibility of the person making the projections when contrasted with the actual numbers, but in my view, failure to produce such documents bears less significance when weighing whether to make a of finding civil contempt.
25Also, the defendants’ point to the vigour with which the plaintiffs pursued production of Jack’s Visa card statements for which the Corporate Defendants made the payments. Paragraph 18 of the Second Fitzpatrick Order required the defendants to produce such statements. The defendants have always maintained such documents did not exist. The initial contempt motion material cited the failure to produce these documents as evidence of contempt. However, by January 4, 2019, the plaintiffs had to concede that such statements indeed do not exist because the personal card which Gerry was so sure was being paid from corporate funds actually belonged to an employee of the business. The defendants argue this demonstrates the intransigent nature of the plaintiffs’ position in this matter and their desire, not to resolve the case, but rather, to stall the litigation by making endless rounds of demands for documents of little or no relevance.
26Further, I accept the defendants’ submissions that, all six of the items that the plaintiffs say have not been produced – set out specifically in the plaintiffs’ factum at paragraph 39, items (c), (e), (f), (g), (h), and (i) – in fact, have been produced or the relevance of the documents is so minimal as to militate against making any finding of contempt against the defendants.
27In respect of item (c) at paragraph 39 in the plaintiffs’ factum, the defendants submit that they have produced a paginated general ledger and or transaction journal for Jakes for the 2015, 2016, and 2017 years. The plaintiffs state that what has been produced is not in a useable format. The document is 295 pages long. I find that the order has been complied with in respect of this document and the delay in producing this document is not evidence of contempt of my order.
28The shareholders account referred to at paragraph 39(e) was produced in the affidavit of Jeff Witiluk on December 19, 2018. I find that the order has been complied with in respect of this document and the delay in producing this document is not evidence of contempt of my order.
29I have made a finding above about the budgets and projections for Jake’s for 2016 and 2017. I find that the order has been complied with in respect of this document, and the delay in producing this document is not evidence of contempt of my order.
30With respect to the documents at paragraph 39(g), these were not expressly contained in the order, but rather incorporated documents contained in a memo from Mr. Low that had been exhibited in previous motion materials. I agree with the defendants’ submissions that indeed these documents have been previously produced.
31The competitive market analysis documents referred to in paragraph 39(h) were produced after the filing of this motion. I accept the defendants’ submission that they have produced everything they have in this regard. I find that the order has been complied with in respect of this document and the delay in producing this document is not evidence of contempt of my order.
32The employee history summaries referred to in paragraph 39(i) of the plaintiffs’ factum were, again, documents that were not specifically set out in any of the orders, but were documents the plaintiffs asked for in memos from Mr. Low. Mr. Low’s memo is referred to in order, with reference to an affidavit filed on the motion. However I agree with the defendants’ submission that, as the particulars of the documents requested are somewhat vague, appearing as they do in a document that is outside of the four squares of the text of the order, failure to do this in a timely way cannot form the basis for a finding of intentional breach of an order.
33The express lack of an explanation by the defendants in their responding material as to what happened between August 2 and September 3, 2018, with respect to non-production was unhelpful, but not critical to the determination of matters on this motion. I say this because of the comment I made at paragraph 29 in my endorsement of August 1, 2018, noted above. I saw the defendants’ conduct to that point as being helpful and not contemptuous. I still see their conduct as being consistent with trying to produce the necessary documents and move the matter forward. I do not know why the defendants did not get it done by September 3, 2018, like they said they would. However, by September 16, 2018, the defendants began to produce documents. That delay has to be assessed in the context of this litigation and how long it has gone on.
34Overall, it must be remembered that these productions were not the first productions made in this case. They were ongoing productions made in respect of a target valuation date that keeps moving. At the end of the motion in August 2018, counsel for the defendants was perhaps overcome with the positive attitude that actual warm summer weather in Thunder Bay can sometimes engender such that he agreed that 30 days was sufficient to produce documents when the plaintiffs had taken about 12 weeks to compile a list of those documents. Whatever counsel’s mindset may have been at the time, in a case managed file where there have been multiple attendances, the production order was in the nature of ongoing productions, and the parties have been advised to seek directions before bringing motions. To me this speaks to a focus on cooperation rather than taking strict dogmatic positions. In the face of all that the defendants have produced to date, I am not satisfied beyond a reasonable doubt that the plaintiffs have proven that the defendants’ actions amount to contempt of any orders made by this court for productions of documents.
35Throughout this litigation, in addition to the complexity added by the issue of when exactly the shares will be valued, the parties have had to grapple with the toxin of interfamily hatred, economic hardship, and mistrust. All these factors provide context and have come to define this matter, at least as I have seen it unfold before me as case management judge. In this case, despite having been focused on production for about three years, it is a very important contextual fact that the parties have yet to commit to a valuation date for the shares owned by the plaintiffs. In my view, this must be plainly understood as it has coloured the defendants’ conduct.
36I was particularly concerned with some of the language used by the plaintiffs in their notice of motion. The notice of motion, dated October 24, 2018, was prepared after the October 18, 2018, case conference. In the prayer for relief, following the paragraphs asking for an order for contempt, the plaintiffs asked for the following orders:
the defendants, Jack Witiluk, Jeffery Witiluk and Ryan Witiluk, shall be and are sentenced to a term of twelve months imprisonment;
the defendants Jack Witiluk, Jeffery Witiluk and Ryan Witiluk, shall personally pay to the plaintiffs all costs incurred in the litigation to date attributable to the contempt of the defendants;
the OPP and all police forces in Canada are directed to assist in the enforcement of the committal warrant;
an order striking the defence of the defendants.
37In submissions, counsel for the plaintiffs took full responsibility for the language. I have presided over a number of civil and family contempt motions. I have never seen express language in any previous motion materials asking for an express period of imprisonment, let alone one asking for 12 months on a first time contempt motion. I view this kind of language in a formal motion record submitted by counsel in a case managed matter as plainly unacceptable and unnecessary. It was particularly unhelpful to this process.
38At the October 18, 2018, case conference, the plaintiffs stated their determination to press on with their motion even in the face of a significant amount of production having been made, albeit on the eve of that attendance. The defendants were plainly on notice that the plaintiffs were seeking an order for contempt. They were still producing documents. Both counsel were well aware that civil contempt involves a two-step process. First, there must a finding of contempt. Only then does the court move on to the issue of penalty. I dare say, ordering imprisonment for civil contemnors on a first finding of contempt is rare.
39Following service of the motion materials, there is no doubt that more documents were subsequently produced – not a great many more, but some. The plaintiffs assert that these documents would not have come but for their pressing ahead. At this point, it would be impossible to say what would have happened had the plaintiffs just stopped and assessed what they had actually received. However, considering the motion in light of the almost ten year history of the litigation, to me, the plaintiffs pressing on with the motion was ill advised. While the plaintiffs were successful in obtaining production orders before me on previous occasions, the orders were obtained largely on consent and were for documents that were required because the litigation was continuing. I agree with counsel for the defendants’ submission that a party who does not intend to obey a court’s order generally does not consent to that order in the first place.
40The litigation started in 2010. Completely apart from the various production motions brought by the plaintiffs, the defendants have produced a significant number of documents covering many years of activity. The plaintiffs have not demonstrated to my satisfaction that the unproduced documents are critical to the case. Therefore, I find that the defendants’ inability to produce them until after September 3, 2018, does not prove beyond a reasonable doubt that their conduct was contemptuous of any order made in this matter.
41I see the plaintiffs’ position on this motion as being dogmatic rather than pragmatic. Lacking a valuation date, the plaintiffs are unable to say how, specifically, the recent lack of production has genuinely prejudiced their case or hindered their ability to move the matter forward.
42I am concerned with comments made on the cross-examinations that show that Ryan discussed Jeff’s evidence with him immediately before Ryan was cross-examined, which suggest some collusion to tailor Ryan’s evidence. That behaviour is not to be encouraged. Ever. However, in my view, it is insufficient to prove beyond a reasonable doubt that the defendants do not intend to comply with the orders at issue.
43I find the defendants have been complying with the orders at issue in good faith. Both parties’ obligation to produce relevant documents will continue. Of course, the main burden of production falls to the defendants. They have been making good faith efforts to comply. I would not exercise my discretion to find them in contempt.
44The motion is therefore dismissed.
Costs
45In the middle of the motion I asked the parties to estimate how much they would be seeking from the other side if they were successful. Counsel initially agreed that an amount of $15,000 to $20,000 for costs would reasonably represent partial indemnity costs for a successful party given the amount of work and paper that has been produced on this motion. Later, counsel for the plaintiffs upped the estimate as he had travel costs.
46As the motion for contempt was dismissed, in the normal course, I would be inclined to order costs payable personally by Gerry to Jack, Ryan, and Jeff. However, there is no question that Jack, Ryan, and Jeff did not produce any documents as of September 3, 2018. I recall counsel explaining at the October 18, 2018, conference that this was because he could not give all the documents required by that time and wanted to give them all at once. Unfortunately, this representation, which I recall, did not make it into any affidavits filed on this motion. Also, counsel for the defendants could have written to plaintiffs’ counsel in late August asking for an extension of time. Apparently this did not happen.
47Costs are always at the court’s discretion. I have exercised my discretion in favour of the defendants in declining to make an order for contempt for the reasons noted above. If I did make a finding of contempt this would lead to an injustice as the defendants’ conduct was not contemptuous. Alternatively, and continuing in the spirit of attempting to reinforce the idea that cooperation in this litigation is to be encouraged, I am exercising my discretion in favour of the plaintiffs with respect to costs. I find that their decision to continue with this motion and to use the language they used in their notice of motion was unhelpful to the overall process. However, it did lead to the defendants producing more documents. This was a limited form of success, which shields them, barely, from a costs award that they would otherwise have to pay personally.
48Both sides’ conduct, noted above, since September 3, 2018, has not been “text book civil.” It was ill-advised and unhelpful to efficiently moving the matter forward. This leads me to exercise my discretion; I make no award of costs on this motion. I do not wish to add any more fuel to the fire already figuratively burning between these parties.
Conclusion
49The parties in this matter have to begin to focus on getting the matter to trial. Priority should be given to obtaining valuations of the plaintiffs’ shares. The parties shall exchange discovery plans within 45 days of this order. Any dispute as to the plans shall be addressed first at a case conference before any further motions are brought.
50The motion material filed on this motion for contempt contains sensitive commercial information. During the course of the motion, I ordered, without objection by counsel, that the three boxes in which the material is now contained be sealed and would only to be accessed by the parties, experts retained on their behalf, or their counsel until further order of the court. I hereby continue that order.
51Order to go dismissing the motion, ordering exchange of discovery plans within 45 days, and sealing the motion material until further order. No order as to costs.
“original signed by” The Hon. Mr. Justice F.B. Fitzpatrick
DATE: April 9, 2019
COURT FILE NO.: CV-10-365-00 DATE: 2019-04-09
SUPERIOR COURT OF JUSTICE - ONTARIO B E T W E E N: GERALD WITILUK and THE TRUSTEES OF THE GERALD WITILUK FAMILY TRUST Plaintiffs
- and - JACK WITILUK, JEFFREY WITILUK, THE TRUSTEES OF THE JACK WITILUK FAMILY TRUST, DENTRO HOLDING COMPANY LTD., BALMORAL PARK AUTO INC., 539159 ONTARIO LIMITED, JAKE’S SPEED SHOP INC. and PHASE 2 VENTURES INC. Defendants JUDGMENT ON MOTION Fitzpatrick J. DATE: April 9, 2019 /lvp