COURT FILE NO.: CV-20-00002352
DATE: 20201202
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
John E. Davies, Li Guo, Yip Yuk Chun, Baili Zhang, Ho Tran, Marilyne Dagher, Xuedong Lu, Ziyuan Zhou, Xiaoming Xu, Rong Wen, Kirupakaran Ehamparam, Tony Kin-Chung Lo, Zhi Cong Lin and Tingjie Liang
Plaintiffs
– and –
Adnan Arif Syed aka Arif Adnan Syed aka Arif Saied, John Doe 1, John Doe 2, John Doe 3, John Doe 4, John Doe 5, John Doe 6, John Doe 7, John Doe 8, John Doe 9, John Doe 10, John Doe 11, John Doe 12
Defendants
Ronald Birken and Alexander Hora, for the Plaintiffs
David Marcovitch, for the Defendants
HEARD: November 3, 2020
REASONS FOR DECISION
EDWARDS J.:
Overview
[1] The Plaintiffs are all owners of residential single family homes located in Richmond Hill, Markham and Thornhill. I will refer to these single family residential homes as “the residences”.
[2] All of the Plaintiffs entered into lease agreements of their homes with the Defendant Arif Adnan Syed (“Syed”).
[3] While the lease agreements between the Plaintiffs and Syed contemplated Syed residing in the residences with his family, as events transpired he had no intention of using the residences for his own personal purposes, but rather intended to utilize the residences as rooming houses.
[4] The Plaintiffs sought an exparte injunction before me in September 2020, the effect of which if granted would have evicted all of the Defendants including Syed from the residences.
[5] On September 23, 2020, I released reasons in which I ultimately came to the conclusion that this court did not have jurisdiction to grant an eviction order given the application of s. 168(2) of the Residential Tenancies Act, 2006 S.O. 2006 c. 17 (“the Act”), which reserves to the Landlord and Tenant Board (“LTB”) exclusive jurisdiction to determine all applications in matters where jurisdiction is conferred under the Act.
[6] While I ultimately came to the conclusion that this court did not have jurisdiction to grant what effectively would amount to an eviction order, what I did do on September 24, 2020 was to order (“the September 24 order”) - amongst other things, that the Defendants restore the residences to their former status as a single family residence so as to thereby comply with the provisions of the local zoning bylaws which prohibit rooming houses.
[7] On October 8, 2020, Syed brought a motion to set aside the September 24 order. After hearing submissions from counsel, I ordered Syed to comply with the September 24 order by October 13, 2020. The order of October 8, 2020 (“the October 8 order”) further provided that in the event Syed did not comply with the September 24 order requiring him to restore the residences to their former status as single family residences, then the Plaintiffs would be at liberty to re-enter the residences and to take whatever steps were required to ensure compliance with all zoning bylaws.
[8] As a result of further non-compliance on Syed’s part, this matter came back before me on October 27, 2020, at which time I issued a further order requiring more detailed compliance on the part of Syed as it relates to my earlier orders.
[9] When the matter was before me on October 27, 2020, counsel for the Plaintiffs pursued as a remedy the granting by this court of a writ of possession. The Plaintiffs’ motion returnable before me on October 27, 2020, further contemplated the court making an order finding Syed in contempt of the October 8 order. Both motions were adjourned to November 3, 2020.
[10] After hearing all of the evidence as it relates to the issue of contempt as well as the Plaintiffs’ motion seeking a writ of possession, I released brief oral reasons, the essence of which were as follows:
a) a finding by this court that Syed was in contempt of the October 8 order by reason of his failure to restore the residences to single family dwellings; and
b) the court would issue an order granting the Plaintiffs exclusive possession of their respective residences; the enforcement of such order, however, was stayed until November 13, 2020 to allow Syed one last chance to effectively comply with the October 8 order, and also to allow Syed an opportunity to purge his contempt.
I made it clear to the parties at the completion of the hearing on November 3, 2020, that I would release more detailed written reasons. These are those written reasons.
[11] The essence of Syed’s evidence is that he has made all reasonable efforts to comply with the October 8 order. Specifically, he puts before the court evidence that he has removed various locks on interior doors and has removed curtains that were placed to provide privacy to those occupying areas of the residences as roomers.
[12] Syed has taken limited steps towards complying with the order of October 8. At one point prior these proceedings, Syed admits he had in excess of 90 people occupying the residences as roomers. By the time this matter was heard by me on November 3, 2020, that number had been reduced to approximately 73 individuals. The fact that the vast majority of the individuals who were occupying the residences as roomers prior to the October 8 order continued to occupy the residences, demonstrates a complete lack of good faith on the part of Syed with respect to substantial compliance with the October 8 order.
[13] Syed testified in response to a question put to him by the court at the completion of his cross-examination, as to whether or not he had served any notices to evict on any of the occupants of the various residences. Syed maintains that by placing a notice in the front lobby or on the front door of each residence, effectively bringing to the attention of the occupants the various orders of this court, that he has demonstrated an intent to comply with the court’s order. Syed’s failure to provide any form of written notice to each individual occupying the residences demonstrated, in my view, a complete lack of Syed’s good faith obligation to comply with the October 8 order.
[14] In addition to the aforementioned failures on the part of Syed to comply with the court’s orders, it is worth noting that Syed continued to accept rent from many of the roomers occupying the residences. When confronted with this evidence, Syed rhetorically asked what he was supposed to do and whether by his non-acceptance of rent it would have done anything to further comply with the court’s orders.
[15] The fact that Syed continued to accept rent is a further reflection of his real intentions. Syed had no intention of complying with this court’s order to restore the residences to their former status as a single family residences unless he was absolutely forced to do so.
[16] Syed’s complete lack of bona fides was further demonstrated during the course of his evidence, when he freely admitted that when he entered into the various lease agreements he did so fraudulently misrepresenting to each of the Plaintiffs his true intentions. Where the Plaintiffs believed that Syed was going to occupy the residences with his wife, two children and one of his in-laws, the true intent was never revealed, specifically his intention to convert the various residences into rooming houses and maximize his income potential, while at the same time not even complying with his rental obligations to the various landlords.
[17] While this conduct pre-dates any of the court orders and is therefore not contemptuous conduct, it is nevertheless conduct that demonstrates Syed is someone who is prepared to be fast and loose with the truth. Simply put, weighing all of the evidence before the court on this contempt motion, I am satisfied Syed had no intention to restore the residences to their former status as single family residences until he was staring down the barrel of a contempt motion.
[18] In coming to the ultimate conclusion that I did in providing my brief oral reasons of November 3, 2020, I considered – and still do, that Syed has not appealed any of the orders made by this court, nor has he sought any stay of proceedings. Amongst the various findings in my reasons of September 23, 2020, was a finding that the various lease agreements entered into by Syed with the various Plaintiffs were void ab initio as a result of his fraudulent misrepresentations. This finding has never been appealed. In fact, Syed’s own evidence confirms the fraudulent misrepresentations that induced the various Plaintiffs to enter into lease agreements with Syed.
Exclusive Possession Order
[19] When this matter was before me on November 3, 2020, I made an order granting the Plaintiffs exclusive possession of their respective residences, the enforcement of which was stayed until November 13, 2020.
[20] At the time this order was made, Mr. Marcovitch argued on behalf of Syed that this court did not have jurisdiction to grant an order for exclusive possession, as the only statutory authority for an eviction order of a residential tenancy is within the exclusive jurisdiction of the LTB.
[21] In my reasons of September 24, 2020, I reviewed the law and my concerns with respect to the exclusive jurisdiction of the LTB. Recognizing the exclusive jurisdiction of the LTB, I made the order that I did requiring Syed to restore the residences to their former status as single family residences.
[22] Syed, at the time when this aspect of the motion was heard on November 3, 2020, had failed - in my view, in a material respect to comply with the earlier orders of this court, specifically the order requiring him to restore the residences to their former status as single family residences.
[23] If I accept the submissions made on behalf of Syed that this court has no jurisdiction to make an order enforcing this court’s earlier orders, then it would make a mockery of our entire judicial system. Orders of the court are meant to be obeyed, and when they are not this court cannot sit idly by where the evidence clearly demonstrates an almost complete lack of will on the part Syed to comply with a court order, coupled with the ongoing destruction of the Plaintiffs’ properties.
[24] This court must have the ability to uphold, protect and to fulfill its judicial function in administering justice according to the law in a manner that is regular, orderly and effective. This court has an inherent jurisdiction to do just that. The law with respect to the inherent jurisdiction of the Superior Court is well summarized by Brown J. (as he then was) in Abrams v. Abrams, 2010 ONSC 2703, 2010 O.J. No. 1928, beginning at para. 30 ff.
[25] In addition to the inherent jurisdiction of the court to maintain its authority and prevent its process being obstructed and abused, this court also has the jurisdiction under Rule 60 of the Rules of Civil Procedure to provide an enforcement remedy. In the circumstances of this case, I am satisfied that this court had the jurisdiction that it exercised when it made the order that it did on November 3, 2020, granting the Plaintiffs exclusive possession of their own residences.
The Contempt Finding
[26] As I have already indicated, when this matter was before the court on November 3, 2020, the court made a finding that Syed was in contempt of the prior orders of this court, the essence of which required him to restore the residences to their former status as single family residences.
[27] Syed filed his own affidavit in response to the Plaintiffs’ motion seeking an order finding him in contempt. Prior to receiving this affidavit, I reminded Syed that a civil contempt proceeding is a quasi-criminal matter and, as such, he was not under any obligation to testify. Syed chose to file his affidavit, and as such was cross-examined on that affidavit.
[28] In order for this court to make a finding of contempt, the court must be satisfied of the following:
that the order involved must state clearly and unequivocally what should and should not be done;
Syed must have actual knowledge of the order; and
Syed must have intentionally done the act that the order prohibits, or intentionally failed to do the act that the order compels (See Carey v. Laiken, 2015 SCC 17, [2015] 2 S.C.R. 79, at paras. 32-35).
[29] The order or orders involved in this case could not have been clearer. Syed was obliged to restore the residences to their former status as single family residences. The evidence in this case is uncontradicted that Syed continued to rent out and accept rent from people occupying the various residences that had been turned into what, in essence, were rooming houses.
[30] As to Syed’s knowledge of the various orders, there is no doubt that Syed – even on his own evidence, accepts that he understood and had knowledge of this court’s earlier court orders.
[31] As to the third aspect of the test for civil contempt, I am satisfied that Syed - while he did make some limited attempts to comply with the court orders, intentionally continued to rent out the residences as rooming houses as evidenced by his own evidence of November 3, 2020, when he testified that there still remained in the residences 78 of the earlier 90 individuals. His further intention demonstrating his lack of compliance can be found again in his own evidence where he continued to accept rent from the various individuals occupying the residences, as well as the fact that other than affixing a copy of the court order to the front entrance of some of the residences, he took no other active steps to remove the remaining occupants.
Penalty
[32] When this matter came back before the court on November 20, 2020, I received further evidence with respect to the status of the residences. I also received further evidence from Syed. I again cautioned Syed that he was not under any obligation to testify given the quasi-criminal nature of these proceedings. Syed chose to testify, and as an aside initially testified via Zoom while he was driving his vehicle.
[33] As of November 20, 2020, the evidence establishes that the majority of the residences have been restored to their former status as single family residences, albeit with considerable physical damage to the properties. There remain three residences that continue to be occupied as rooming houses with approximately 10 individuals therein.
[34] Mr. Birken, on behalf of the Plaintiffs, seeks a period of incarceration as well as his costs. Mr. Marcovitch opposes any period of incarceration, arguing that Syed has done his best to comply with the court orders.
[35] I did not impose any penalty when this matter was before me on November 20, 2020. I did, however, amongst other things, order Syed to produce his bank statements and not withdraw any monies from those bank accounts except for the necessities of life until further order of the court. This aspect of my order was designed to provide the court with additional information as to the extent of the monies received by Syed as a result of his illegal rooming house operation of the residences.
[36] In his responding affidavit, Syed essentially leaves the court with the impression that he is the victim in this case, where he states in his affidavit “the fact is I am struggling”. He further deposes in his affidavit “I live with my wife, my two children (two boys aged 11 and 13) and my mother-in-law. I contribute to the family expenses to the extent I am able. At this point, given my financial state, most of our expenses are paid by my wife through funds she receives from Bangladesh”.
[37] The credibility of Syed’s evidence reflected in his affidavit of November 19, 2020, does not line up with the inescapable mathematics of the rooming house operation that he has been operating. By his own evidence when he was cross-examined, he agreed that he was likely receiving at a minimum an average of $500 for each room that he rented out. If Syed had 90 roomers, then on a monthly basis he may well have received something in excess of $40,000 in cash. Syed testified that not all of the roomers actually paid him. Even accepting that some of the individuals who were illegally occupying the various residences might not have paid Syed, I do not accept his evidence that he is struggling. For that reason, I ordered the production of his bank account statements given his own evidence that the monies that he did receive would have been reflected in his bank accounts.
[38] In determining the appropriate penalty in the face of a finding of civil contempt, this court is guided by the decision of the Court of Appeal in Chiang (Re), 2009 ONCA 3, where at para. 11 the Court of Appeal stated:
In civil contempt, the court's emphasis is less about punishment and more about coercion -- attempting to obtain compliance with the court's order. Still, civil contempt bears the imprint of the criminal law. Civil contempt must be made out to the criminal standard of proof beyond a reasonable doubt. And, a person found in civil contempt of court may be committed to jail or face any other sanction available for a criminal offence, such as a fine or community service.
[39] As I indicated in Feigin v. L’vova, 2018 ONSC 5091, at para. 69, the penalty phase of a civil contempt hearing bears many similarities to the criminal law, and as such the principles of sentencing that are entrenched in the Criminal Code at s. 718.1 have found their way into many of the cases dealing with civil contempt. Those principle I summarized as follows:
a) The sentence must be proportionate to the gravity of the offence and the degree of responsibility of the offender:
b) The sentence must be increased or decreased as the case may be, to account for aggravating or mitigating factors surrounding the contempt or the contemnor
c) A sentence should be similar to sentences imposed on similar contemnors, for similar contempt committed in similar circumstances (see s. 718 of the Criminal Code and Chiang at para. 24)..
d) Sentences should be fashioned in such a way as to denounce the unlawful conduct of the contemnor; promote a sense of responsibility in the contemnor,; and perhaps of even greater significance deter the contemnor and others from defying lawful court orders (see Chiang, at para. 24).
e) In imposing sentence, the court must consider a sanction that does not involve jail (see s. 718(2) of the Criminal Code).
[40] In crafting a sentence in this case, I have concluded that it is important that the court reflect both the principles of deterrence and denunciation, while at the same time also building into it an element of coercion as suggested by the Court of Appeal in Chiang.
[41] In coming to an appropriate disposition on penalty, I have also considered the imposition of a restitution order. At para. 11 of the Court of Appeal’s decision in Re Chiang, this court in imposing a penalty against Syed may commit him to jail, or face any other sanction for a criminal offence such as a fine or community service. To impose a fine will be of no benefit to the Plaintiffs. A restitution order on the other hand will benefit the Plaintiffs. A restitution order is something the court may impose in sentencing a criminal offender - see the Criminal Code of Canada s. 738. While it is not the job of this court to determine the Plaintiffs’ entitlement to and/or the quantum of damages claimed, this court can impose a restitution order as part of the penalty phase of this contempt motion.
[42] As part of this contempt motion the court received affidavit evidence from some of the Plaintiffs, and heard from some of the Plaintiffs about the damage to their properties and the garbage strewn throughout many of the homes. I also now have Syed’s bank account statements.
[43] Syed produced his bank statements from his TD bank account beginning in February 2019. Unfortunately, whether by design or otherwise, the statements do not provide a reconciliation at the end of each month showing total deposits and total withdrawals – this, unlike the statements Syed did produce for his HSBC account, that did have monthly reconciliations.
[44] While the statements from the TD account are not reconciled at the end of each month a quick tally of the deposits in October 2019 and February 2020 demonstrate the magnitude of the income deposited to Syed’s account. A rough approximation shows that in October 2019 there was approximately $81,000 deposited while in February 2020 there was approximately $60,000 deposited . What is equally significant are the comparable withdrawals made each month. By way of example in October 2019 there was approximately $71,000 withdrawn from the TD account and approximately $53,000 withdrawn in February 2020 (including a bank draft for $11,737).
[45] A review of Syed’s HSBC account, which only covers the time period April-August 2020, establishes that at its peak Syed appears to have received deposits ranging from approximately $19,000 to $35,000, with similar withdrawals each month. Many of the withdrawals were for sizeable cash amounts, while other withdrawals appear to be for normal expenses of daily living - with perhaps one notable expense. Each month there is a debit of $5,123 for a lease payment, presumably the monthly lease of Syed’s Lamborghini sports car. The fact that Syed is leasing a Lamborghini sports car does not measure up with his assertion that he is “struggling”.
[46] While my review of Syed’s bank account statements cannot be seen as a forensic review, they do establish beyond doubt the quantum of Syed’s rooming house business. My review also leaves me with little confidence in Syed’s assertion that he is “struggling” and reliant on his wife for monies she receives from Bangladesh. On the contrary, what the bank account statements do seem to reveal are substantial cash withdrawals during the currency of Syed’s fraud that he has perpetrated on the Plaintiffs. Based on my review of Syed’s bank account statements, I am satisfied that it is appropriate to impose a restitution order as part of the penalty portion of this contempt motion.
[47] The sole purpose of the restitution order is to provide a fund against which the Plaintiffs may draw on to provide a means to clean up and begin the repair of their homes. It is impossible to determine on the basis of the evidence received in this contempt motion, the full extent of the damage done to the residences. Those damage claims will have to be fully established as this action proceeds. It is beyond doubt that the cost to repair the residences and restore them to their former status will be substantial.
[48] I am therefore ordering that as part of the penalty for having been found in contempt, Syed shall make restitution to the Plaintiffs in the sum of $36,000. The owners of each of the 12 residences shall receive the sum of $3,000 out of the aforesaid $36,000.
[49] Provided Syed makes restitution of the aforesaid $36,000, I do not intend to impose a jail sentence on Syed. In not imposing a jail sentence, I have considered the COVID-19 pandemic and the additional strain a jail sentence would have on our already overburdened correctional centres. However, if Syed fails to pay the restitution within 10 days of today’s date, then this court will issue a Warrant of Committal in Form 60L against Syed, the last paragraph of which shall read “You are ordered to arrest Adnam Arif Syed aka Arif Adnan Syed aka Arif Syed and deliver him to a correctional institution today, to be detained there for a period of 120 days”.
[50] As for the costs of this motion, I have received the parties’ written costs submissions. Mr. Birken, on behalf of the Plaintiffs, seeks costs on a substantial indemnity scale fixed in the amount of $75,000 (inclusive of disbursements and HST), or $57,000 on a partial indemnity scale. Mr. Marcovitch submitted cost submissions suggesting costs of $16,000 on a partial indemnity basis, or approximately $24,000 on a substantial indemnity basis.
[51] In making the award of costs set forth below, I have considered the factors that I am required to consider under Rule 57. I have also considered the jurisprudence from the Court of Appeal in Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 (C.A.), and Davies v. Clarington (Municipality) et al., 2009 ONCA 722, which requires the court to consider what the unsuccessful party might reasonably have been expected to pay in costs. Syed suggests an award of costs of $26,400. In my view, Syed must have known that he was facing the potential for a significantly higher award of costs given the various costs awards that had been made against him in earlier attendances before this court.
[52] An award of substantial indemnity costs in this case is entirely appropriate. Syed could have avoided the series of motions beginning in early October, culminating in the motions I am now dealing with, had he simply complied with the orders of this court. The Plaintiffs should never have been put in the position that they were had Syed been honest with them from day one - he was not. His dishonesty and his blatant disregard for court orders has resulted in the needless incurring of legal costs that justify substantial indemnity costs.
[53] I am fixing the Plaintiffs’ costs in the amount of $50,000 all-inclusive, which are payable forthwith.
Justice M.L. Edwards
Released: December 2, 2020
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
John E. Davies, Li Guo, Yip Yuk Chun, Baili Zhang, Ho Tran, Marilyne Dagher, Xuedong Lu, Ziyuan Zhou, Xiaoming Xu, Rong Wen, Kirupakaran Ehamparam, Tony Kin-Chung Lo, Zhi Cong Lin and Tingjie Liang
Plaintiffs
– and –
Adnan Arif Syed A.K.A. Arif Adnan Syed A.K.A. Arif Saied, John Doe 1, John Doe 2, John Doe 3, John Doe 4, John Doe 5, John Doe 6, John Doe 7, John Doe 8, John Doe 9, John Doe 10, John Doe 11, John Doe 12
Defendants
REASONS FOR DECISION
Justice M.L. Edwards
Released: December 2, 2020