2020 ONSC 4921
COURT FILE NO.: CV-20-00639748-00CL
DATE: 20200821
ONTARIO
SUPERIOR COURT OF JUSTICE
(Commercial List)
BETWEEN:
THRIVE CAPITAL MANAGEMENT LTD., THRIVE UPLANDS LTD., 2699010 ONTARIO INC. and 2699011 ONTARIO INC.
Plaintiffs
– and –
NOBLE 1324 QUEEN INC., MICHAEL HYMAN, GIUSEPPE ANASTASIO, DAVID BOWEN, NOBLE DEVELOPMENTS CORPORATION, HAMPSHIRE AND ASSOCIATES INCORPORATED, LISA SUSAN ANASTASIO, RAJEREE ETWAROO and CON-STRADA CONSTRUCTION GROUP INC.
Defendants
Brian Radnoff, Nathan Lean and Joshua Suttner for the plaintiffs
Terry Corsianos for the defendants Noble 1324 Queen Inc., Michael Hyman, Giuseppe Anastasio, David Bowen, Noble Developments Corporation and Hampshire and Associates Inc.
HEARD: June 19, 2020
Koehnen J.
Overview
[1] The plaintiffs ask that I find the defendants Michael Hyman, Giuseppe Anastasio, David Bowen, Noble 1324 Queen Inc., Noble Developments Corporation and Hampshire and Associates Inc. (collectively “the Developer Defendants”) to be in contempt of my orders dated April 23, 2020, May 19, 2020, June 1, 2020, and June 10, 2020.
[2] At the close of the hearing on June 19, 2020, I indicated that I found the Developer Defendants in contempt of court with reasons to follow. These are those reasons.
[3] Michael Hyman, Giuseppe Anastasio, David Bowen and the corporations they control have engaged in a string of obstructive conduct to deprive the plaintiffs of access to information about what the Developer Defendants have done with approximately $9,000,000 that the plaintiffs invested through Messrs. Hyman, Anastasio and Bowen.
[4] The statements that Messrs. Hyman, Anastasio and Bowen made to the court have been regularly contradicted by contemporaneous documents to the point that they lack credibility or reliability. They have blatantly ignored even the simplest of court orders, have forced the plaintiffs to court on numerous occasions to deal with their outright refusals to comply and have wasted scarce public resources in doing so. They have treated court orders as meaningless scraps of paper that could be used to tie the plaintiffs up in knots rather than as mandatory directives that form an essential part of basic social order.
[5] Rule 60.11 provides that, in the case of contempt by a corporation, a judge may also make an order against any officer or director of the corporation.
[6] Mr. Hyman is the CEO and a director of Hampshire and Associates Inc. In addition, he is a director of Noble 1324, and a director and officer of Noble Developments. Mr. Anastasio is a director of Noble 1324. Mr. Bowen is a Senior Vice President of Noble Developments. As such, he is an officer of that corporation by virtue of the definition of officer under the Ontario Business Corporations Act.
[7] To the extent any of these corporations are in contempt, I make additional contempt orders against Messrs. Hyman, Anastasio and Bowen for the conduct of the corporations of which they are officers or directors.
Background to the Action
[8] The plaintiffs invested $9,000,000 in two corporations: 2699010 Ontario Inc. (“9010”) and 2699011 Ontario Inc. (“9011”).
[9] Unanimous shareholders’ agreements were signed in respect of each corporation. The fundamental business deal embodied in the shareholders’ agreements was that the plaintiffs would be 50% shareholders in both corporations, one of the plaintiffs’ principals, Harjot Singh, would be a director of both corporations and no expenditures above $5,000 could be made without Mr. Singh’s approval. Each Corporation was to buy a property for redevelopment. 9010 was to purchase a property in Brampton. 9011 was to purchase a property in Richmond Hill.
[10] Although the Brampton property was purchased, it was not purchased in the name of 9010. Instead, it was purchased in the name of the defendant Noble 1324 Queen Inc., a corporation controlled by the defendants Michael Hyman, Giuseppe Anastasio and David Bowen.
[11] In addition, the defendants registered over $10,000,000 in mortgages against the Brampton property which stood in priority to the mortgage that the plaintiffs were supposed to receive as security for their investment. The plaintiffs say that Mr. Singh was not consulted on the registration of the mortgages and did not approve them.
[12] The purchase of the Richmond Hill property was scheduled to close on April 23. The defendants Hyman, Anastasio and Bowen had also arranged for the Richmond Hill property to be purchased by a corporation controlled by them instead of having it purchased by 9011 as agreed.
[13] The defendants submit that it was necessary to assign the purchase of the two properties to a different entity because they could not obtain financing for a numbered company. That submission is not worthy of belief. The name of a corporation makes no difference to its ability to obtain financing. In the highly unusual event that it did, the defendants could simply have changed the names of 9010 and 9011 to names that they say would have been more acceptable to their lenders.
[14] As a result, I issued a Mareva injunction against the Developer Defendants on April 23, 2020. The Mareva injunction required the Developer Defendants to provide various forms of information to the plaintiffs. The Developer Defendants failed to do so. The plaintiffs moved for contempt initially on May 19, 2020. At that time, I found that the Developer Defendants were in breach of my order of April 23, 2020, but held that contempt should be the ultimate step in dealing with non-compliance, not the first step. I pointed out the manner in which the Developer Defendants had failed to meet the terms of the April 23rd order and gave them additional time to bring themselves in the compliance. Further attendances occurred on June 1 and June 10 for additional relief pursuant to my April 23 order.
The Legal Test for Contempt
[15] It is useful to set out the basic legal framework at the outset of these reasons so that each allegation of contempt can be assessed against it.
[16] The Supreme Court of Canada set out the following three-part test to establish civil contempt in Carey v. Laiken, 2015 SCC 17, [2015] 2 S.C.R. 79, at paras. 33 – 35:
(a) The order in question must state clearly and unequivocally what should or should not be done.
(b) The alleged contemnor must have had actual knowledge of the order. Depending on the circumstances, knowledge may be inferred. Willful blindness offers no defence.
(c) The alleged contemnor must have intentionally done the act that the order prohibits or failed to do what the order demands.
[17] Each element must be proven beyond a reasonable doubt: Carey at para. 32.
[18] There is no suggestion that the Developer Defendants lacked actual knowledge of the orders.
[19] The requirement of intention in the third element of the test does not require an intention to act in contempt. It merely requires an intention to do something prohibited by the order or not do something required by the order: Sabourin and Sun Group of Companies v. Laiken, 2013 ONCA 530, 116 O.R. (3d) 641, at para. 57. The disobedience must be deliberate, willfully blind, indifferent or reckless: Boily v. Carleton Condominium Corporation 145, 2013 ONSC 1467, at paras. 32, 39-40, aff’d 2014 ONCA 574, 121 O.R. (3d) 670, at paras. 56, 58.
[20] A court order is binding until it is varied or quashed. That the order may be difficult to comply with is not an excuse for non-performance. If difficulties in complying arise, it is up to the person subject to the order to have it varied. To hold otherwise would allow the person subject to the order to determine whether he perceives it as “appropriate or convenient” to comply: Garley v. Gabai-Maiato, 2006 ONCJ 28 at para. 14.
The Acts of Contempt
(i) Affidavit of Assets
(a) Mr. Hyman
[21] The April 23 order required that each of the Developer Defendants provide an affidavit of assets.
[22] Mr. Hyman’s affidavit of assets states that:
(a) he has one bank account at RBC with $17 in it;
(b) he owns shares in 9010, 9011, Noble Developments and Hampshire, which he valued at $500;
(c) Noble 1324 has one bank account at RBC with $1,500 in it;
(d) Noble Developments does not have a bank account. It has $200 in assets consisting of shares in Noble 1324 and Noble 12826 Leslie Corp., the entity that was supposed to complete the purchase of the Richmond Hill Property; and
(e) Hampshire has three RBC accounts, with a total of $216 as of May 7, 2020.
[23] Mr. Hyman had, however, signed a Net Worth Statement dated March 9, 2020, which was given to Infinite Capital, the entity providing funding for the Richmond Hill purchase. The Net Worth Statement showed net assets of $15,061,000. This included $5 million in cash, 100% ownership of a house in Mississauga (encumbered with a loan of $465,000), 100% ownership of a Rolls-Royce and a Lamborghini with a total value of $1,564,000 and 100% ownership of five additional automobiles with a value of $2,370,000 and encumbrances of $1,008,000.
[24] Mr. Hyman provides no explanation for a net worth in March of over $15,000,000 and a net worth of $517 six weeks later.
[25] Moreover, Mr. Hyman was present at the virtual hearing on April 23, 2020. At that time, he asked to be permitted to use $40,000 per month from his personal assets for living expenses. He provides no explanation for why he would even ask to use $40,000 per month of assets for living expenses when his total assets amount to $517 as he claims in his affidavit of assets.
[26] Mr. Hyman’s assertion of $517 in assets is also inconsistent with his earlier assertion that he was required to provide personal guarantees in order to obtain millions of dollars in loan financing for the purchase and development of the Brampton and Richmond Hill properties.
[27] In addition, the affidavit of assets that Mr. Hyman swore on behalf of Noble 1324 does not mention the Brampton property even though Noble 1324 is its registered owner. In his net worth statement to Infinite Capital he listed the Brampton Property as his personal asset with equity of $2.2 million.
(b) Mr. Anastasio
[28] Mr. Anastasio’s affidavit of assets discloses three assets: a bank account with RBC containing $18,517.91 and two Volkswagen Jettas worth approximately $15,000 each. On May 4, 2020, $5,962.86 was withdrawn from the account with the indication “PorscheCTR Oakv” although Mr. Anastasio claims to own only two Volkswagens.
[29] Although not disclosed on his asset statements, Mr. Anastasio now admits to having leased a 2019 Porsche 911 Targa and a 2018 Rolls-Royce Wraith. He claims that the Rolls-Royce is currently at his daughter’s home in Florida although the lease is in Mr. Anastasio’s name. He does not explain how someone whose only assets are a bank account with $18,000 and two Volkswagen Jettas can afford a Porsche 911 and a Rolls-Royce, even if they are leased.
[30] Mr. Anastasio was also present at the hearing on April 23 and asked for leave to use $20,000 of his assets each month for living expenses. He provides no explanation of where the $20,000 per month was to come from.
[31] The Developer Defendants submit that it would be inappropriate to take the affidavits of assets into account in a finding of contempt because they did not know that the affidavits of assets constituted part of the contempt complaint until they received the plaintiffs’ factum on the motion.
[32] In Schick v. Boehringer Ingelheim (Canada) Ltd., 2011 ONSC 63, Justice Strathy (as he then was) stated at para 15:
Third, the plaintiff, who bears the burden of proof, is required to put his/her full case forward in the first instance. The defendant is entitled to know the case that he/she must meet and it is impermissible for the plaintiff to split the case – either by using reply to introduce new evidence that could or should have been made as part of the case in chief or by simply reasserting the merits of his/her case…
[33] The notice of motion for the June 19 contempt hearing quotes and reproduces paragraph 5 of the April 23rd order which requires the affidavits of assets. The notice of motion does not, however, refer to the affidavits of assets as part of the grounds for contempt. The affidavits accompanying the notice of motion also do not make clear that the plaintiffs are relying on deficiencies in the affidavits of assets as a basis for contempt.
[34] In those circumstances, I do not believe it would be appropriate to hold the Individual or Corporate defendants in contempt based on the affidavits of assets.
[35] The affidavits of assets nevertheless remain relevant to the issue of contempt. In paragraphs 9–11 of my reasons of May 19, 2020, I stated that a detailed accounting was all the more necessary in this case because of the incongruities between the defendants’ affidavits of assets and the statements of assets they gave to Infinite Capital. In paragraph 11 of my reasons of May 19, 2020, I stated expressly that none of the defendants has filed affidavits that provide “any explanation for these obvious incongruities.”
[36] Thus, while the affidavits of assets do not constitute a reason for holding the defendants in contempt, they help make clear why the nature and timing of the accounting and other disclosure required by the court orders are so important and why the failure to comply with those orders in a timely manner is so serious. Bluntly put, in the absence of credible affidavits of assets, the accounting and disclosure provisions of the court orders assume even greater importance than they would otherwise have.
(ii) Failure to Provide an Accounting
[37] Paragraph 7 of the order of April 23, 2020, required the Developer Defendants to provide a “full accounting of all funds deposited, withdrawn or removed from” the Royal Bank of Canada bank accounts of 9010 and 9011 together with “backup and supporting documents and records.”
[38] The initial accounting the defendants provided consisted of three pages which showed deposits from Thrive of approximately $8,000,000 and a long series of withdrawals in favour of the individual defendants with entries such as:
a. “$180,000 Mr. Bowen financial services”
b. “$414,000 Mr. Anastasio, Mr. Hyman, partial of covenant payment” (sic)
c. “$150,045 Mr. Anastasio, interest repayment due to Thrive delays”
d. “$300,000 Hampshire and Associates”
[39] That accounting shows payments to Mr. Hyman of $200,000, to Hampshire and Associates of $317,000, to Mr. Anastasio of $850,000, to Mr. Bowen of $190,000 and additional undifferentiated payments to Messrs. Hyman and Anastasio of $1,859,000.
[40] No supporting documents or explanations were provided for any of these payments to the individual defendants.
[41] On May 19, 2020, I found the Developer Defendants to be in breach of the April 23rd order and issued a new order, paragraph 4 of which repeated the demand for an accounting and added the language:
“..with all backup, supporting documents and records, including but not limited to, copies of any cheques, bank drafts, wire details, e-transfers, bank account details, invoices and any agreements, communications, telephone records, correspondence or documents of any kind in relation to any deposit, withdrawal or payment out of the Accounts. For greater certainty, the accounting shall include detailed, full and complete information about what was done with the money in the Accounts, who the money went to, where it was sent, the account it was deposited into, what it was for and what any recipient did with that money.”
[42] The additional language I added on May 19, 2020, was not necessary. It merely describes what an accounting is. As I noted in paragraph 8 of my endorsement of May 19:
- The deficiencies in the defendants’ accounting are particularly serious because it shows over $2,600,000 in payments from the bank accounts to individual defendants. The accounting provides no backup or supporting documents or records for those payments. The core allegation in the claim is that the defendants took the plaintiffs money and, rather than investing it, dissipated it for their personal use. Given these allegations and given that the evidence to support them was strong enough to warrant an interim Mareva injunction, the plaintiffs are entitled to information about what was done with money from the accounts referred to in the April 23 order. The plaintiffs are entitled to information about who the money went to, what it was for and what any defendant recipient did with that money
[43] The additional information the defendants provided was not responsive to either the April 23 or the May 19 orders. They produced “invoices” for millions of dollars in favour of the individual defendants with the description “Financial Obligations” with no further detail and no further backup documentation.
[44] In their factum on the motion for June 19, the defendants admit that the accounting remains “incomplete” despite the timelines set out in the orders of April 23 and May 19. The Developer Defendants submit that they require the assistance of a professional accountant and require 90 days to complete the accounting. The Developer Defendants submit that this is not a case of contempt but a case of their having made best efforts to comply but having fallen short.
[45] Mr. Hyman filed an affidavit saying that he has “struggled” with the accounting and that he could not find a professional to assist due to the Covid-19 pandemic and tax season. In addition, Mr. Hyman points out that the defendants have provided accounting documents for the various corporations as well as for Mr. Anastasio and Mr. Bowen personally and have provided account statements from the Royal Bank of Canada for each of the accounts listed in the April 23 order.
[46] As noted earlier, Mr. Hyman lacks credibility and reliability. His statements in respect of the accounting suffer from the same difficulties.
[47] Mr. Hyman provides no details of any efforts he has made to get accounting help. He does not provide names of any accountants he approached, does not provide any correspondence from accountants indicating that they are unable to help, does not provide information about any accountant who will be able to help during the 90 day extension he seeks and does not provide any evidence from an accountant explaining why they require 90 days to prepare an accounting.
[48] The accounting documents the defendants have provided are entirely unsatisfactory. As noted earlier, they consist of invoices for “financial services” and “covenant payment”. There is no description of the financial services, no description of the covenant and no documentation to support services that justify millions of dollars in payments of investor money to Messrs. Hyman, Anastasio and Bowen.
[49] The reference to having provided account statements from Royal Bank of Canada is disingenuous. The corporate and individual defendants do not appear to have made any effort to obtain bank statements from Royal Bank as they were required to do by the order of April 23. Instead, the plaintiffs obtained certain documents from Royal Bank pursuant to non-party disclosure orders which documents they shared with the defendants. The defendants then copied what the plaintiffs had given them and attached it to their affidavits in purported compliance with the April 23 order.
[50] The initial accounting that the defendants provided showed that Mr. Bowen was paid $180,000 from a bank account belonging to 9010. It appears that the payment was made by bank transfer to another account. No corresponding deposit is recorded on the statement for Mr. Bowen’s RBC account which at least suggests that he has other undisclosed accounts.
[51] In his affidavit of assets, Mr. Hyman also asserted that Noble Developments did not have a bank account. Records obtained from RBC disclose that, as of April 23, 2020, Noble Developments had an investment account with RBC which contained a GIC of $100,000. On May 5, 2020, $50,339.73 was withdrawn from the investment account and transferred to a company called Wilshire. That transfer constitutes a further breach of the Mareva injunction. Mr. Hyman has provided no explanation for the transfer nor has he provided any explanation to justify the transfer in the face of the Mareva injunction. Wilshire was incorporated on April 20, 2020. Mr. Hyman was its founder and sole director. Since the hearing, his counsel forwarded me resignation documents from Mr. Hyman which purport to show that he resigned as a director on April 20, 2020. Given that this information arose after the hearing and that it was not accompanied with any explanation for why Mr. Hyman would name himself as a director on April 20 and resign the same day, I ascribe no weight to that information. I note that Mr. Hyman remained the sole director on public filings after April 20.
[52] The position of Messrs. Hyman, Anastasio and Bowen with respect to other non-disclosure issues is equally troubling. They were ordered to produce communications regarding the withdrawal of money from the accounts. They respond by saying there are no written communications and that communications were primarily oral in nature, either person-to-person or over the phone. In a similar vein, when the plaintiffs noted that the defendants had not produced any ledgers, accounts or other financial or accounting information for 9010, 9011, Noble 1324 and Noble 12826 Leslie Corp., the defence response is that no such documents exist because the corporations were only recently Inc. That strains credulity. In other words, Messrs. Hyman, Anastasio and Bowen say that they withdrew millions of dollars of funds that the plaintiffs had given them without so much as an email, a text message, a handwritten note or a yellow sticky between them concerning the payments.
[53] It is clear that a wide variety of documentation does exist but the defendants have simply not produced it. This is demonstrably so with respect to the RBC bank statements, the asset statements given to Infinite Capital and, as we will see below, the email traffic with Infinite Capital.
[54] I find the Developer Defendants to be in contempt of the requirement to provide an accounting in the following respects:
(a) Messrs. Hyman, Anastasio and Bowen all received money from the accounts of 9010 and 9011. They have failed to provide the information required by the April 23 order and paragraph 4 of the order of May 19, 2020. Even if they did require professional assistance to provide a full accounting (which I do not accept on the record before me), Messrs. Hyman, Anastasio and Bowen have provided no explanation for why they could not explain in affidavit form why they were entitled to money from 9010 and 9011 and what they did with the money received.
(b) Noble 1324 has failed to comply with the accounting requirements in the April 23 and May 19 orders. Mr. Anastasio and Mr. Hyman are liable for that breach as directors of the corporation.
(c) Noble Developments has failed to comply with the accounting requirements in the April 23 in May 19 orders. Mr. Hyman is liable for that breach as an officer and director of the corporation. Mr. Bowen is liable for that breach as an officer of the corporation.
(d) Noble Developments transferred funds on May 5, 2020, out of its RBC account to Wilshire. There has been no credible explanation for the transfer. Messrs. Hyman and Bowen are personally liable for that breach as directors or officers of the corporation.
[55] In all of the foregoing instances, there has been no satisfactory explanation for failure to comply with the orders of April 23 and May 19, nor has there been any effort to vary the orders. In those circumstances, I find that the Developer Defendants intended to commit the acts set out above that were prohibited by the orders or intended to fail to carry out the actions required by the orders. I am satisfied beyond a reasonable doubt of both the breach of the orders and the intention to breach them.
(iii) Failure to Provide Disclosure
[56] Paragraph 18 of the April 23 order required the individual and corporate defendants to produce documents related to the Richmond Hill Property. The defendants initially took a narrower view of the order than was intended. That was clarified in my endorsement of May 19 in which I made clear that I was compelling the Developer Defendants to produce all documents relating to the Richmond Hill property whether relevant to closing or not. The Developer Defendants were given until May 29 to bring themselves into compliance.
[57] The Developer Defendants disclosed no documents from Infinite Capital except a letter of intent dated April 17, 2020, and an email dated May 8, 2020, advising that Infinite would not proceed with the financing.
[58] On June 5, 2020, Infinite Capital produced its file pursuant to a non-party disclosure order. It produced approximately 40 emails, only one of which the Developer Defendants had disclosed, and 31 documents, only two of which the Developer Defendants had disclosed.
[59] The non-disclosure is significant. By way of example, Mr. Hyman did not produce the asset statement that Infinite Capital was given showing him to have a net worth of over $15,000,000. The plaintiffs received it only through the non-party disclosure order against Infinite Capital. Mr. Hyman has never explained his failure to disclose that document.
[60] Moreover, the disclosure from Infinite Capital demonstrates that Mr. Hyman and Mr. Bowen actively misled the court about their intentions with respect to the Richmond Hill Property.
[61] When the Mareva injunction was granted on April 23, 2020, the Developer Defendants had used approximately $2,000,000 of the plaintiffs’ money to put a deposit on the Richmond Hill property. The purchase of the Richmond Hill property was scheduled to close on April 30. On April 23, Developer Defendants assured the court that they were ready, willing and able to close the Richmond Hill purchase and that it would be completed as scheduled. The purchase did not close.
[62] In his affidavit of May 11, 2020, Mr. Hyman stated under oath that the purchase did not close because Infinite Capital withdrew funding as a result of the Mareva injunction. In his words:
“The reason why the lender pulled its funding was on account of this lawsuit…But for the lender pulling its financing, we would have been ready, willing and able to close on the Richmond Hill Property.”
Mr. Bowen adopted that evidence in his own affidavit.
[63] In support of this evidence, Mr. Hyman attaches an email from Infinite Capital dated May 8, 2020, which reads:
Unfortunately we will not be able to provided funding the above stated development project at this time, or at which such time the Maraval Injunction has been lifted. We would be happy to revisited the possibility of providing financing once the Order date April 23, 2020 has been settled and finalized.
[64] That same day, Mr. Bowen responded:
Thank you Nina – we are disappointed not to be proceeding with the project but fully comprehend you reasoning.
[65] Contemporaneous documents on which Mr. Hyman was copied demonstrate that the explanation he gave in his affidavit is false.
[66] It was actually the Developer Defendants who withdrew from the transaction and then told Infinite Capital to write the email of May 8. When Infinite Capital’s first effort to produce an email was unsatisfactory, Mr. Bowen told Infinite Capital to write a different email.
[67] The Developer Defendants disclosed none of this email traffic to the plaintiffs.
[68] The emails are worth quoting from at some length to demonstrate the degree to which the Developer Defendants are prepared to mislead the court and breach its orders.
[69] On April 28, 2020, Mr. Bowen wrote to Infinite Capital with a copy to Mr. Hyman stating:
Thank you for your time yesterday and for understanding our position that we felt compelled to share with you in the spirit of full transparency.
We cannot proceed given the threats and real possibilities of litigation/ legal actions/cautions being registered/mareva injunctions are lurking which would make it impossible for all parties involved to transact.
We are obligated to share this with you now in good faith so you and the lender can reallocate resources as necessary.
So we can defend ourselves properly and vigorously, may we presume upon you to issue us a letter saying that the lender has had to withdrawn the funding given the potential that the property may be tied up in litigation etc…Please also advise when we may receive the $20k good faith deposit… [emphasis added]
[70] Infinite responded that day:
…Thank you for advising me of the difficulties you have encounter with your silent partner on the above state property, and due to receiving threat from your silent partner to pursue legal actions against you along with a mareva injunctions. It is not possible for you to uphold to our agreement to arrange financing of your behalf, given you are rescinding from the purchase of the above stated development site…
[71] Mr. Bowen replied asking Infinite to change its email so that it appeared that Infinite was cancelling the financing:
In the spirit of full transparency we brought the issues we have/may be facing to you as it would lead to an unconsummated or frustrated closing. Without doing so, we felt we would be misleading any lender as the title would be encumbered and we know it is standard practice that a lender would rescind the financing when put on such notice of events.
May we therefore ask you to slightly amend your email to us to say that the lender is rescinding the financing deal given this knowledge that we imparted…This would be very helpful. [emphasis added]
[72] Once again, Mr. Hyman was copied with the email.
[73] The only explanation the defendants have provided for their failure to produce documentation from Infinite Capital is that the plaintiffs now have full production of the file from Infinite Capital. That is no response. The obligation was on the defendants to produce. The obligation was not on the plaintiffs and the court to seek and issue non-party production orders. The defendants’ very explanation demonstrates contempt for the court process. After refusing to comply with court orders and misleading the court about what happened, the defence response is simply that the plaintiffs can get the information elsewhere.
[74] Messrs. Hyman and Bowen have offered no explanation for their failure to disclose those documents. Their failure to do so and their lack of a credible explanation for that failure amount to contempt.
[75] The defendants’ disclosure remains deficient in other respects as well. It does not include:
(a) any communications between the defendants themselves or with third parties regarding the withdrawal or payment of money from the bank accounts at issue;
(b) ledgers, accounts or other financial information for 9010, 9011, Noble 1324 and Noble Leslie, or the actual minute books for Noble 1324 and Noble Leslie (paragraph 8 of the April 23 order and paragraph 5 of the May 19 order);
(c) copies of any text messages between the Developer Defendants (May 19 order paragraph 5);
(d) contact information for any individual or entity who received funds from the bank accounts of 9010 and 9011, other than Lisa Anastasio and Blue Star Construction (April 23 order paragraph 9 and May 19 order paragraph 4);
(e) all communications with lenders, including applications or net worth statements for the purposes of obtaining financing (April 23 order paragraph 18 and May 19 order paragraph 7);
(f) copies of individual emails which formed part of email chains. As a result, attachments to earlier emails in the chains were missing;
(g) the complete bank statements of the Developer Defendants (May 19 order paragraph 9) ; and,
(h) electronic copies of the backup documents supporting withdrawals from the bank accounts in question with the metadata intact (May 19 order paragraph 8).
[76] The plaintiffs advised the Developer Defendants of these deficiencies on June 1, 2020.
[77] At the June 1 case conference, the Court gave the Developer Defendants until 5:00 p.m. on June 3 to comply with the April 23 order and the May 19 order. The individual and corporate defendants have not provided any further disclosure or documentation since May 29. They have not sought to vary the order and they have not provided any explanation for their failure to comply other than denying the existence of such documentation.
[78] The statement that there is no such documentation is not credible and provides no defence.
[79] By way of example, there was clearly email correspondence between the Developer Defendants and Infinite Capital that was not disclosed. None of Messrs. Hyman, Anastasio or Bowen have described any efforts they have made to search for any of the documentation they were required to produce. Willful neglect and willful blindness to an obligation provide no defence.
[80] As a result of the foregoing, I find that:
(a) Mr. Hyman is in contempt of court for failing to produce the asset statement that was provided to Infinite Capital.
(b) Messrs. Hyman and Bowen are in contempt of court for having failed to produce the exchange of emails between Noble Developments and Infinite Capital relating to the reasons for failing to close the Richmond Hill property.
(c) Mr. Bowen is in contempt of court for failing to produce the correspondence between Noble Developments and Infinite Capital relating to the reasons for failing to close the Richmond Hill property both personally and for the breach by Noble Developments.. Mr. Bowen was an officer of Noble Developments. He has provided no explanation about efforts he took to comply with the order as an officer of Noble Developments.
(d) Messrs. Hyman and Anastasio are in contempt for failing to produce the documentation required by paragraphs 76 (b). Both are directors of 9010, 9011 and Noble 1324. Neither has provided any explanation for efforts they took to find documentation of those corporations.
(e) Messrs. Hyman, Anastasio and Bowen are additionally in contempt for each of the deficiencies listed in paragraph 76 above insofar as they relate to themselves as individuals and the Developer Defendant corporations of which they are officers or directors.
(iv) Failure to Close the Richmond Hill Property
[81] The Richmond Hill property was originally scheduled to close on April 23, the date of the Mareva injunction. On April 23, the defendants advised that they had received an extension until April 30. Paragraphs 17 – 22 of the April 23 order contain several provisions concerning the closing of the Richmond Hill property.
[82] Paragraph 20 of the April 23 order required the defendants to complete the purchase of the Richmond Hill property on April 30 on specific terms.
[83] The defendants failed to close the purchase.
[84] The defendants submit that their failure to close cannot amount to contempt because contempt is not available for payment of money. Rule 60.11 of the Rules of Civil Procedure provides:
(1) A contempt order to enforce an order requiring a person to do an act, other than the payment of money, or to abstain from doing an act, may be obtained only on motion to a judge in the proceeding in which the order to be enforced was made.
[85] The Developer Defendants also rely on the decision of Laskin J.A. in Dickie v. Dickie (2006), 2006 CanLII 576 (ON CA), 78 O.R. (3d) 1 (ONCA). Although Laskin J. A. was dissenting in the Court of Appeal, his opinion was adopted by the Supreme Court of Canada in Dickie v Dickie 2007 SCC 8, 1 S.C.R. 346. At paragraph 103 of the Court of Appeal decision, Laskin J.A. stated:
My colleague argues that rule 60.11(1) should be interpreted in the light of its object or purpose. I agree. The purpose of the exception in rule 60.11(1) is to exclude the use of the contempt power – which carries with it the possibility of imprisonment -- for fixed monetary obligations, that is, debts, between a debtor and a creditor. We no longer imprison people for their failure to pay a civil debt. See R. v. Wu, 2003 SCC 73, [2003] 3 S.C.R. 530, [2003] S.C.J. No. 78, at para. 2.
[86] The issue is, however, more nuanced than the defendants suggest.
[87] In paragraph 104 of Dickie, Laskin J.A. went on to state:
However, to determine whether an order is an order for the payment of money under rule 60.11 (1), one must consider to whom the money is being paid and the effect of the order for payment.
[88] By adopting the opinion of Laskin J. A., the Supreme Court of Canada held that an order requiring payment of money into court or payment of money as security is enforceable through the contempt mechanism.
[89] Other courts have held that rule 60.11 means that contempt is not available for the failure of one party to pay money to another party to the action but that the rule does not apply to payments to non-parties: Noble v. Noble, 2003 CanLII 9907 (ON SCDC), [2003] O.J. No. 2924 (ON Div. Ct.), at para 8.
[90] In this case, the circumstances are such that the failure to close the Richmond Hill property purchase is subject to contempt. The defendants appeared in court on April 23 assuring the court that the purchase of the property would be closed on April 30. They did so presumably to demonstrate their bona fides and possibly in an attempt to avoid the imposition of a Mareva injunction. An order was granted requiring them to close the purchase. That order was material because the defendant had already put approximately $2,000,000 of the plaintiffs’ money into the Richmond Hill property as a deposit.
[91] As noted earlier, a mandatory order is one that must be complied with unless it is stayed, varied or set aside on appeal.
[92] The defendants never applied to vary the order. Requiring them to have done so is of material importance here. Had the defendants come to court and explained that they were no longer able to close, the plaintiffs could have assumed carriage of the matter and tried to obtain a solution that may have protected their interests. Instead, the defendants told Infinite Capital that they were withdrawing from the transaction, orchestrated an email from Infinite Capital which suggested that it was Infinite Capital that was withdrawing from the transaction rather than the defendants and failed to communicate with the vendor and plaintiffs, all of which led to the plaintiffs’ $2,000,000 deposit being forfeited to the vendor.
[93] This was not an issue of impecuniosity but an issue of the Developer Defendants taking proactive steps to breach a court order.
[94] In these circumstances I am satisfied beyond a reasonable doubt that Messrs. Hyman and Bowen intended to fail to close the Richmond Hill property and took proactive steps to ensure that the transaction would not close. They are in contempt of court for doing so.
(v) Failure to Provide Contact Information
[95] Paragraph 9 of the April 23 order and paragraphs 4 and 6 of the May 19 order required the Developer Defendants to provide contact information for all individuals or entities who received funds from the accounts of 9010 and 9011, including Lisa Anastasio, by May 4, 2020. Lisa Anastasio is the wife or former wife of the defendant Giuseppe Anastasio.
[96] Mr. Anastasio provided the physical address for Lisa in Florida but did not provide an email or telephone number. On May 4, 2020, the plaintiffs requested Lisa’s email address. Mr. Anastasio refused to provide Lisa’s email address and insisted that the plaintiffs contact her through Mr. Anastasio.
[97] Mr. Anastasio could not even comply with a court order as simple as providing contact information for Ms. Anastasio. This compelled the plaintiffs to return to court to obtain another order requiring Mr. Anastasio to provide the email address.
[98] Messrs. Hyman, Anastasio and Bowen then persisted in their failure to provide contact information for individuals or entities who received funds from the bank accounts of 9010 and 9011 in breach of the April 23 and May 19 orders.
[99] The identity of the recipients of hundreds of thousands of dollars of payments from the bank accounts remains unknown.
[100] The bank records the plaintiffs have received to date show a significant number of branch to branch payments from accounts of 9010, 9011 or the Developer Defendants. The Developer Defendants have provided no information about the recipients of those funds.
(vi) Failure to Provide Information Concerning Automobiles
[101] Paragraph 9 of the June 1 order required Mr. Hyman to provide information concerning a Lamborghini, a Porsche, Mercedes-Benz and a Land Rover Range Rover. Paragraph 10 prohibited the defendants or anyone else from operating the vehicles or removing them from the locations in which they were kept.
[102] Mr. Hyman refused to provide the location of the automobiles. In his affidavit of June 9 he explains his lack of compliance by stating that he will be appealing the June 1 order and “once the appeal has been resolved, [he] will abide by any court order.”
[103] That provides no excuse for failing to comply. Mandatory orders are not stayed pending appeal. They must be complied with until a stay is obtained, they are varied or they are overturned on appeal. No motion has been brought to vary the order.
[104] Although Mr. Hyman asserts that the Mercedes belongs to his mother, he has provided no evidentiary support for that allegation. The car is in the name of his own company, Hampshire and Associates. Although he makes the bald statement in his affidavit of June 9, 2020, that his mother has been paying for the car, he provides no evidence in support of that assertion. Given the significant credibility issues associated with Mr. Hyman, I cannot accept this assertion without some form of proof beyond a bald statement from him. That car continues to be driven.
[105] In addition, as of June 19, Mr. Hyman had not provided the location or VIN numbers of certain vehicles. Mr. Hyman asserts that the vehicles are now at an automobile dealership. That is irrelevant to his obligation to provide VIN numbers. He has not introduced any evidence to suggest why he could not produce VIN numbers from older insurance documents, contracts of purchase and sale, lease documents, ownership registration documents or from the dealerships themselves.
[106] In addition, the Range Rover was not present at the location where Mr. Hyman indicated it was being kept. That suggests that the Range Rover is being used contrary to earlier court orders.
[107] In his affidavit of June 9, 2020, Mr. Hyman also suggests that he is not in contempt because he does not own the automobiles but leases them. Mr. Hyman does not attach lease documentation nor does he explain why the automobiles were listed as being owned by him on the asset statement given to Infinite Capital.
[108] I find Mr. Hyman to be in contempt of the provisions of the orders requiring him to produce VIN numbers and requiring that the Mercedes and the Land Rover Range Rover not be driven. Mr. Hyman has not moved to vary the orders. He has provided no evidence to describe any efforts he made to obtain the VIN numbers. In those circumstances I am satisfied beyond a reasonable doubt that Mr. Hyman has intentionally failed to produce VIN numbers and has intentionally failed to ensure that at least the Mercedes and the Land Rover Range Rover were not driven.
Promissory Estoppel
[109] The defendants submits that the plaintiffs are precluded from moving for contempt by the principle of promissory estoppel. They cite the well-known passage from the Supreme Court of Canada’s reasons in John Burrows Ltd. v. Subsurface Surveys Ltd., 1968 CanLII 81 (SCC), [1968] S.C.R. 607 at p. 615, to the effect that:
It seems clear to me that this type of equitable defence cannot be invoked unless there is some evidence that one of the parties entered into a course of negotiation which had the effect of leading the other to suppose that the strict rights under the contract would not be enforced, and I think that this implies that there must be evidence from which it can be inferred that the first party intended that the legal relations created by the contract would be altered as a result of the negotiations.
[110] The defence submission is that settlement discussions were occurring between the plaintiff and the defendant which somehow led the defendants to believe that no contempt proceedings would be taken.
[111] The evidence in this regard comes from Mr. Hyman and is contained in his affidavit of June 9, 2020. In paragraph 14 of that affidavit Mr. Hyman notes that the Developer Defendants were under a deadline to comply with the May 19 order by 5 p.m. on May 29. Mr. Hyman then states:
“Though Mr. Thapar was reluctant to formally adjourn the deadline of May 29, 2020, he nonetheless clearly indicated to us that he would not seek to hold us in contempt of court for any failure to comply with the May 29, 2020 deadline on account of our negotiations.”
[112] Contemporaneous documents show the following: Mr. Hyman’s lawyer reached out to Mr. Thapar for a settlement discussion on May 27, 2020. Mr. Thapar responded with an email of the same day indicating that stating among other things:
What your client’s may want to say has very little credibility at this juncture. While I am prepared to listen to what they have to say on a completely without prejudice basis, the Investor Group’s patience is very thin. We are at this time proceeding for speed with the additional claims parallel to any discussion they may want to have.
This makes clear that any settlement discussions would continue in tandem with the litigation.
[113] Moreover, a case conference occurred before me on June 1, 2020. The endorsement arising out of that case conference gave the defendants “one last chance” to comply with the orders by the end of the day on June 2. At the same case conference, the plaintiffs asked to set June 19 as the hearing date for the contempt motion.
[114] At most, the only possible indulgence that Mr. Hyman could credibly assert out of the circumstances is that he was given until June 2 to comply with the outstanding court orders rather than May 29.
[115] This does not create any promissory estoppel against the plaintiffs.
Disposition
[116] For the reasons set out above, I find the Developer defendants to be in contempt of the orders of April 23, 2020 and May 29, 2020. Counsel me approach me for a hearing date on the sanctions motion.
[117] If any party wishes to seek costs of this motion as opposed to having the cost dealt with as a whole at the end of the sanctions motion, they may make written submissions within 14 days of the release of these reasons. A responding party shall have seven days to answer with a further three days for reply.
Koehnen J.
Released: August 21, 2020
COURT FILE NO.: CV-20-00639748-00CL
DATE: 20200821
ONTARIO
SUPERIOR COURT OF JUSTICE
Commercial List
BETWEEN:
THRIVE CAPITAL MANAGEMENT LTD., THRIVE UPLANDS LTD., 2699010 ONTARIO INC. and 2699011 ONTARIO INC.
Plaintiffs
– and –
NOBLE 1324 QUEEN INC., MICHAEL HYMAN, GIUSEPPE ANASTASIO, DAVID BOWEN, NOBLE DEVELOPMENTS CORPORATION, HAMPSHIRE AND ASSOCIATES INCORPORATED, LISA SUSAN ANASTASIO, RAJEREE ETWAROO and CON-STRADA CONSTRUCTION GROUP INC.
Defendants
REASONS FOR JUDGMENT
Koehnen J.
Released: August 21, 2020