COURT FILE NO.: CV-15-22137
DATE: 20190116
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Zeldap Corporation
Applicant
– and –
Coffee Time Polska SP. Z.O.O. and Emil Pona
Respondents
Gregory D. Wrigglesworth, for the Applicant
Benjamin G. Blay, for the Respondents
HEARD: December 3, 2018
RULING ON MOTION
Hebner J.:
[1] The applicant has brought a motion for:
A declaration that Emil Pona is in contempt of the order of Carey J. dated February 23, 2016;
An order compelling Emil Pona to comply with the order of Carey J. by providing the applicant with access to all books and documents of Coffee Time;
In the event that Emil Pona remains in contempt, an order that he be imprisoned until such time as he purges his contempt; and
Costs.
[2] This is my ruling on the motion.
The Motion
[3] Zbigniew Pona is the principal of the applicant, Zeldap Corporation (“Zeldap”). Zbigniew Pona and Emil Pona are brothers. Emil’s wife is Lillianna Pona. For ease of reference I will refer to these three persons by their first names.
[4] Zbigniew, through Zeldap, and Emil owned a coffee shop together called “Coffee Time” in Wroclaw, Poland. Prior to 2007, Coffee Time was an active business enterprise operated by Emil. It closed in 2007. Subsequent to the closure of Coffee Time, the brothers moved, independently, to Ontario.
[5] The brothers have been unable to agree on the proceeds of the business. An order was made by the District Court for Wroclaw-Fabryczna in Wroclaw, Poland on June 19, 2012 (“the Polish order”). An English translation of the Polish order has been filed with this court. The decision reads that the court:
decides:
I. to grant authorization to review the books and documents of Coffee Time Spotka sp. z.o.o. in liquidation removed from the National Court Register to the former partner, ZELDAP CORPORATION seated in Windsor, Canada.
II. to bind the keeper of the dissolved company, Emil Pona, to disclose the books and documents within 14 days from the date of serving the decision.
[6] The decision further provides under the heading “substantiation”:
On 4 June 2012 the attorney of the former partner of the company COFFEE TIME sp. z.o.o. in liquidation, ZELDAP CORPORATION, filed a motion for awarding authorization to review the books and documents of Coffee Time Spotka sp. z.o.o. in liquidation removed from the National Court Register.
The company COFFEE TIME sp. z.o.o. in liquidation was removed with a final and binding decision of this Court dated 14 June 2011, case file ref. no. WR. VI Ns-Rej. KRS 8942/11/567.
It appears from company files that ZELDAP CORPORATION was its partner. The resolution on entrusting Emil Pona with keeping company books and documents was made on 5 April 2011 – card 905 of company files.
Pursuant to Article 288 § 4 of the Code of Commercial Companies, based on authorization of the registration court, partners and persons with legal interest can review the books and documents. With the consideration of the above, pursuant to the quoted provision, the decision stated above is hereby upheld.
[7] As outlined in the Polish order, Zeldap was to have access to review the records of Coffee Time. Emil was the individual entrusted with those records. According to the affidavit of Zbigniew, Emil did not comply with the order.
[8] Zbigniew moved to Canada. He applied for an order of this Court recognizing the order made in Wroclaw, Poland. Carey J., on February 23, 2016, on the consent of the parties, granted an order recognizing the Polish order as against Coffee Time Polska SP. Z.O.O. and Emil Pona, jointly and severally, in the province of Ontario. The order of Carey J. has the effect of turning the Polish order into a valid and binding order of this Court.
Access to Records
[9] On December 1, 2015, Zbigniew was given access to two large binders of documents of Coffee Time. In his affidavit, he says he was given less than an hour to review the documents. He was able to review only a small portion (he estimates 10 percent) of the contents of the first binder.
[10] In February 2016, Zbigniew was given a further opportunity to review documents. On that occasion, he says he was provided with only documents from 2010 forward, by which time Coffee Time had ceased doing business. No documents relating to the period prior to 2010, and particularly no documents relating to the period during which Coffee Time was operating, were produced. As a result, Zbigniew took the matter back to court in Poland in order to clarify the documents that were required to be provided. The District Court for Wroclaw-Fabryczna issued a further written Decision on January 9, 2017. An English translation has been filed with this court. The Decision provides that the court “decides” as follows:
to interpret the decision of 19 June 2012, … in such a way that the authorization shall pertain to all the books and documents of the removed company which had been given to the custodian of files, Emil Pona.
[11] Under the heading “SUBSTANTIATION” the court said:
On 30 August 2016, a motion was received for the interpretation of the decision of 19 June 2012 by adding the period for which the documents of the removed company are to be made available. The motion for granting the authorization to review the books and documents of the company COFFEE TIME sp. z.o.o. in liquidation removed from the National Court register did not specify the years for which the books and documents were to be made available to the shareholder.
Article 352 of the Code of Civil Procedure provides that the Court that issued a decision should adjudicate with the reference to any doubts arising in connection thereof. The decision in that scope may be issued by the court during a closed-door session.
Given the above, pursuant to the quoted provision, the court interpreted the decision in such a way that the authorization shall pertain to all the books and documents of the removed company which had been given to the custodian of files, Emil Pona.
[12] In short, then, the Polish court has ordered Emil be the custodian of the Coffee Time books and documents. The Polish court has ordered that Emil make those documents available to Zbigniew for review. The court has specified that all of the documents be made available. Those orders are now recognized in Ontario by order of Carey J. of this court dated February 23, 2016. Zbigniew says that Emil has not complied with the order to make the documents available. He asks that Emil be held in contempt of the order of Carey J.
Allegations of Contempt
[13] Zbigniew’s allegations, as indicated above, are that he has not been given access to all of the records of Coffee Time. In December 2015, he was given less than an hour to review a large number of documents. He was unable to review the documents. In February 2016, he was given an opportunity to review documents. In the documents he was given to review, there were no documents prior to 2010, and there were no documents for the time period Coffee Time was in operation. Zbigniew filed a further affidavit indicating that he was in Poland from May 27 to July 2, 2018; that his brother, Emil, was aware that he was in Poland during this time; Emil did not make the documents available to him.
[14] The test in a civil contempt motion is not in dispute. The test is set out in Carey v. Laiken, 2015 SCC 17, [2015] 2 S.C.R. 79 as follows:
The order alleged to have been breached must clearly and unequivocally state what should and should not be done;
The party alleged to have breached the order must have had actual knowledge of it; and
The party allegedly in breach must have intentionally done the act that the order prohibits or intentionally failed to do the act the order compels.
[15] Each element must be proven beyond a reasonable doubt: see Greenberg v. Nowack, 2016 ONCA 949, 135 O.R. (3d) 525 (C.A.).
[16] Emil filed an affidavit on the motion. In his affidavit, he admits that the Polish order is enforceable against him in Ontario. He does not deny knowledge of the order. He denies that he is in contempt. He states:
“It has never been my intention to thwart Zbigniew’s attempts to access the subject records.”
Zbigniew has had three opportunities to review the records of Coffee Time on December 1, 2015, February 10, 2016 and October 5, 2018.
Zbigniew was required to arrange times and dates for attendance to review records with Emil’s Polish lawyers.
Lillianna provided Coffee Time documents to the Polish lawyers for Zbigniew’s review.
[17] Emil attached to his affidavit original Polish, certified translations of three reports made by the Polish lawyers on each of Zbigniew’s attendance. The reports provide:
On December 1, 2015, at the lawyer’s office, Lillianna arrived at 9:00. Zbigniew arrived at 10:45. Zbigniew did not have enough time to look through two binders filled with documents.
On February 10, 2016, Zbigniew had access to documents. It is noted that Zbigniew borrowed the original agreement with Bank BPH. It is noted that there were less documents than the previous time. One binder was 1/4 full and before it had been all full. There were no documents concerning the closing of the company.
On October 5, 2018, at the lawyer’s office, Zbigniew was given access to documents. The note indicates that he received documents dated 2010 and 2011, and only statements from 2009.
[18] Emil states that he and Zbigniew agreed to assign Coffee Time into bankruptcy in 2007, however they had insufficient funds to cover the cost of a trustee. In 2011, they decided to pursue a court sanctioned liquidation. Coffee Time was liquidated and struck from the National Court register on June 14, 2011.
[19] Emil does not deny that he was appointed keeper of the records of Coffee Time. He does not detail the documents that are, or have been, in his possession or control. He does not deny that documents relevant to the period of time Coffee Time was in operation have not been disclosed to Zbigniew. Instead, he asserts that Zbigniew had access to Coffee Time’s records while it was in business. In his affidavit, he states:
Notably, Zbigniew was a shareholder in Coffee Time. Coffee Time had a professional accountant managing its books and Zbigniew had full access to Coffee Time’s accountant without requiring any permission or co-operation from me. Zbigniew therefore had full access to all of the records of Coffee Time prior to Coffee Time having the Polish equivalent of its charter revoked, which occurred in 2011.
[20] In Zbigniew’s responding affidavit, he asserts that he has not been given access to a single document related to Coffee Time that predates 2009. This statement appears not to be disputed by Emil.
Application of the Principles
[21] I am satisfied, based on the evidence filed, that Coffee Time terminated active operations in 2007. Emil was the court appointed guardian of Coffee Time’s documents in Poland. He was ordered to give his brother, Zbigniew, access to those documents. He has given his brother access to some documents dated 2010 and forward. He has not given his brother access to documents prior to 2009, and certainly not during the period Coffee Time was in business. Emil does not deny that he is the keeper of Coffee Time’s records. He does not assert that records prior to 2009 did not, or do not, exist.
[22] I am satisfied beyond a reasonable doubt that the Polish order is clear and unequivocal. Emil is required to give Zbigniew access to all of the records of Coffee Time, including those records generated during the time that Coffee Time was in operation. I am satisfied beyond a reasonable doubt that Emil had actual knowledge of the Polish order. I am satisfied beyond a reasonable doubt that Emil intentionally breached the order by failing to give Zbigniew access to all of the records of Coffee Time, including those prior to 2009 and including those generated during the time that Coffee Time was in business.
[23] Emil was granted the right to be the custodian of all books and records of Coffee Time by the Polish court. He should have kept those records safe. He should have complied with the clear order of the Polish court to permit Zbigniew access to review those records. He did not.
Disposition
[24] For these reasons, I find that Emil is in contempt of the order of Carey J. dated December 23, 2016. I make the following order:
Emil Pona shall provide to Zbigniew Pona a complete list, with description and date, of every Coffee Time document in his possession or control within 30 days. If he does not have in his possession or control all documents from the time Coffee Time commenced operations to the date its charter was revoked, then he shall provide an explanation.
Emil Pona shall provide Zbigniew Pona with access to all books and documents of Coffee Time within 60 days. Such access shall be provided at the offices of Emil’s lawyers, Cohen Highley LLP in London, Ontario. Zbigniew may attend with his lawyer and accountant at a mutually agreeable time. Alternatively, Emil Pona may deliver copies of all such documents, paper or digital, to Zbigniew Pona.
The motion is adjourned sine die to allow Emil to purge his contempt in the manner described above. In the event of noncompliance, the motion may be returned to me.
The parties may make written submissions on costs, together with a costs outline and any relevant offers to settle, according to the following timeline:
a) the applicant may provide written submissions within 20 days;
b) the respondent may provide written submissions within 20 days thereafter; and
c) the applicant may provide any reply submissions within 10 days thereafter.
Original signed by Justice Pamela L. Hebner
Pamela L. Hebner
Justice
Released: January 16, 2019
COURT FILE NO.: CV-15-22137
DATE: 20190116
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Zeldap Corporation
Applicant
– and –
Coffee Time Polska SP. Z.O.O. and Emil Pona
Respondents
Ruling on motion
Hebner J.
Released: January 16, 2019