COURT FILE NO.: CV-20-00639748-00CL

DATE: 20220712

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 CON-STRADA CONSTRUCTION GROUP INC.

Defendants

Brian N. Radnoff, Dylan E. Augruso, and Dan A. Poliwoda, for the plaintiffs

Justin Necpal, for the Defendant Giuseppe Anastasio

Lorne Sabsay, for the Defendants Michael Hyman and Hampshire and Associates Incorporated

HEARD: May 3, 2022

REASONS FOR DECISION

KIMMEL J.

[1] The defendants Michael Hyman (“Hyman”) and Giuseppe Anastasio (“Anastasio”) and their affiliated companies (collectively, the “Developer Defendants”[^1]) were found to be in contempt of the orders of Koehnen J. dated April 23, 2020, and his “follow-on” orders dated May 19, 2020; June 1, 2020; and June 10, 2020, after a contempt hearing on June 19, 2020. The detailed reasons for these findings (the “Contempt Reasons”) were released on August 21, 2020 (Thrive Capital Management Ltd. v. Michael Hyman et al, 2020 ONSC 4921). Following a sanction hearing held on November 5, 2020, in reasons released on January 21, 2021 (Thrive Capital Management Ltd. et al v. Michael Hyman et al, 2021 ONSC 482), the court rendered judgment against the Developer Defendants in the full amount of the claim ($9 million) as the sanction for their past and continuing contempt of the court’s previous orders (the “Sentencing Decision”).

[2] In a decision dated October 15, 2021 (Thrive Capital Management Ltd. v. Noble 1324, 2021 ONCA 722), the Court of Appeal for Ontario (at para. 36) ordered that the contempt judgment and Sentencing Decision of Koehnen J. be set aside and remitted the matter to another judge of the Superior Court of Justice to determine the appropriate sanction to be imposed upon the Developer Defendants for their contempt of the court’s earlier orders (the “Appeal Decision”). The May 3, 2022 hearing before me was to determine the appropriate sanction (the “re-sentencing hearing”).

The Action

[3] This action arises out of a $9 million investment made by the plaintiffs in two corporations: 2699010 Ontario Inc. ("9010") and 2699011 Ontario Inc. ("9011"). Each corporation had identified a property that would be purchased for redevelopment: 9010 was to purchase a property in Brampton (the “Brampton Property”). 9011 was to purchase a property in Richmond Hill (the “Richmond Hill Property”). The plaintiffs assert that this investment was made by them on the understanding and agreement that they would have 50% control, and general oversight and approval rights, as provided for in unanimous shareholder agreements entered into with each corporation dated July 3, 2019.

[4] The plaintiffs advanced the agreed $9 million. The Brampton Property was purchased, but title was taken in the name of Noble 1324 Queen Inc., not 9010. Mortgages were registered against title in excess of $10 million, which stood in priority to the mortgage that the plaintiffs were expecting to be granted as security for their investment. The plaintiffs discovered this and other alleged improprieties involving the use of their funds and commenced this action in April 2020.

[5] The purchase of the Richmond Hill Property was scheduled to close on April 23, 2020 and that proposed purchase was also disclosed to be in the name of a company controlled by the defendants, not 9011. That purchase did not close. There was an earlier finding of this court in the Contempt Reasons (at para. 94) that Hyman “intended to fail to close the Richmond Hill Property and took proactive steps to ensure the transaction would not close.”

Procedural History and Conduct of the Litigation

[6] Since this is a contempt sanction hearing, the procedural history is of particular relevance.

[7] Some of the more pertinent prior orders and endorsements are summarized below (the italics have been added by me for emphasis in the context of these reasons):

a. After a hearing on short notice, on April 23, 2020 Koehnen J. granted an Interim Order (the “Mareva and Disclosure Order”) for, among other things, a Mareva Injunction restraining the dissipation of the assets of the Developer Defendants (paras. 3-5, 14, 16,), ordering an accounting and various disclosure from them (paras. 7-9), and ordering that they complete the pending purchase of the Richmond Hill Property and provide accounting and disclosure in respect of it (paras. 17-18).

b. In the April 24, 2020 endorsement supporting the Mareva and Disclosure Order, Koehnen J. made the following findings:

i. 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 a name that they say would have been more acceptable to their lenders (at para. 8).

ii. Although the motion was argued on very short notice, which did not give the defendants an adequate opportunity to file materials, they do not contest that the properties were not purchased by 9010 and 9011, corporations through which the investors had some protection. The investors have been deprived of all of those protections. The explanation for purchasing the properties in the names of corporations controlled by the defendants is not credible (at para. 11).

iii. The spiriting away of the principal assets plus the presentation of forged bank statements and the alleged failure to provide detailed information about what had occurred with the investors’ funds all creates a serious issue to be tried (at para. 12).

c. Following a motion for contempt by the plaintiffs for the Developer Defendants’ failure to comply with the Mareva and Disclosure Order, in a May 19, 2020 endorsement Koehnen J. found (at paras. 2 and 3) that the defendants were in “material breach of the order” and that the “order was clear on its face.” However, before considering a motion for contempt (a remedy of last resort), additional guidance as to what the court expected the Developer Defendants to do in respect of the Richmond Hill Property purchase was necessary (at para. 4 of the May 19, 2020 order):

“To avoid any further confusion, I am extending the scope of paragraph 18 to compel the defendants to produce all documents relating to the Richmond Hill Property whether relevant to closing or not.”

Further compliance directions were also provided in connection with the Mareva and Disclosure Order, including with respect to the manner of production of emails with attachments (which had been ordered by para. 7) and regarding the full accounting of funds (which had been ordered by para. 8). Some of the noted non-compliance that the defendants were ordered to remedy by the May 19, 2020 endorsement and order included:

i. The defendants failed to provide any explanation for the deposits or withdrawals, apart from general statements such as payment to Hampshire or some other person or entity… At a minimum, they need to drill down to the end of the text of paragraph 7 which expressly states that the accounting is to be provided "with backup and supporting documents and records." The defendants' accounting falls far short of what the words of the order clearly require (at para. 6).

ii. The order for production of documents "including account statements, records of payments and transfers, agreements, documents related to development or financing and communications" would also include any agreements or documents supporting transfers into or out of the bank accounts that are subject to an accounting in paragraph 7 of the order (at para. 7).

iii. 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 (at para. 8).

iv. Paragraph 9 of the April 23 order requires the defendants to provide contact information for among others, Lisa Anastasio and the recipients of funds from the defined bank accounts. The defendants have failed to do so… That means more than just an address. It also means any other contact information. To be abundantly clear, if the defendants have any sort of contact information at all about any of the individuals referred to in paragraph 9, they are obliged to produce it and their failure to do so would amount to a continued breach of the order (at para. 13).

d. The last sentence of para. 4 of the May 19, 2020 order states as follows: “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.”

e. Paras. 5 to 8 of the Order of Koehnen J. dated May 19, 2020 provided detailed further guidance for compliance with the Mareva and Disclosure Order. The Developer Defendants were given an extension of time for their compliance to May 29, 2020.

f. By an order dated May 27, 2020, Koehnen J. awarded costs to the plaintiffs fixed in the amount of $43,824.11 in respect of the May 19, 2020 motion.

g. At a June 1, 2020 case conference, the court observed (at para. 5) that: “The defendants appear to remain in breach orders the court has issued. Their purported compliance today by producing an accounting does not, on its face, comply with the requirements of the orders requiring an accounting. The defendants shall have one last chance until the end of the day June 2, 2022 comply with the orders.” The court directed that the June 19, 2020 hearing date that had been reserved for the come-back motion on the Mareva Injunction would instead be used to argue the contempt motion. The court also noted, variously:

i. The defendants continue to be in breach of court orders despite opportunities to bring themselves into compliance. The nature of their breach is fairly obvious. It is not a question of having misunderstood a requirement of an order or of some ambiguity in an order. By way of example, the order requiring them to produce an accounting also required them to produce back up documentation. No back up documentation has been produced. The "accounting" they have produced does not meet any standard of an accounting. It consists of a list of payments grouped together in large lump sums without indicating dates, payees or the source of funds. I have referred to their breaches in an earlier endorsement as games playing. The nature of their non-compliance leads me to believe that they continue to play games with the court (at para. 14).

ii. A party that refuses to comply with court orders to begin with and then continues its refusal to comply cannot expect any sympathy for the loss of use of a Lamborghini or other luxury vehicle that appears to have been purchased with or the lease payments for which appear to be financed with the plaintiffs' money. I note that although the defendants have produced assets statements that show them without anything more than a few thousand dollars in assets (if even that in some cases), they continue to drive luxury vehicles. They have failed to offer any explanation for that incongruity (at para. 18).

h. Various third party production orders were also made on June 10, 2020.

i. At the contempt hearing held on June 19, 2020, Koehnen J. found the Developer Defendants to be in contempt of the Mareva and Disclosure Order (for failing to provide the accounting, disclose the location and VIN numbers of certain vehicles, provide affidavits of assets, and provide certain types of other disclosure). Koehnen J. noted that the Developer Defendants’ failure to comply had already been the subject of attendances and findings of breach on May 19, June 1, and June 10, 2020. It was further noted in the preliminary endorsement of the court following that hearing that the defendants had been warned at previous hearings, “that the nature of their breach would, without some explanation, amount to contempt and rise to the level of contempt that has led courts in the past to incarcerate defendants. I sent that message in the hope that it would incentivize the defendants to comply with the orders. Regrettably the defendants have not yet complied.” The individual defendants were ordered to surrender their passports and restrained from leaving the province of Ontario subject to certain conditions.

j. By a further order of June 14, 2020, Hyman and Anastasio were ordered to provide information about certain luxury vehicles they had previously identified among their assets and were restricted from driving those vehicles.

k. Koehnen J. made orders dated July 20, 2020 with respect to the sale of the Brampton Property (and to compel further third party production). In applying the test for an interlocutory injunction to determine the plaintiffs’ entitlement to the mandatory order they sought for the sale of the Brampton Property, Koehnen J. reviewed the evidence upon which he concluded that the plaintiffs had made out a strong prima facie case, concluding (at paras. 15 and 16) that: “There is no doubt in my mind that the failure to abide by the safeguards referred to in paragraph nine [provided for under the shareholders agreement] above constitutes a strong prima facie case of oppression as does the diversion to the individual defendants of funds intended for investment in the Brampton property. The defendants' explanations for their conduct are entirely unsatisfactory.”

At para. 35, Koehnen J. had this to say about the accounting that the Developer Defendants had provided:

Paragraph 7 of the April 23 order required the defendants to produce a "full accounting of all funds deposited, withdrawn or removed from" certain bank accounts "with backup and supporting documents and records." The accounting was particularly sensitive because the records that the plaintiffs had obtained from the defendants' bankers showed payments of over $2,600,000 from those bank accounts to Messrs. Hyman, Anastasio and Bowen. The accounting the defendants provided is perfunctory at best. It is simply a list of general payments with no backup documents to support them. Given that the core allegation against the defendants is that they took the plaintiffs' money and dissipated it for their own personal use as opposed to investing it, and given that this allegation supported the Mareva injunction, one might expect the defendants to have tried to provide some sort of explanation. The best they have come up with is a series of invoices from them with descriptions like "for financial services" or for "financial obligations" without any further explanation. [Emphasis added.]

l. The Developer Defendants were found to be in contempt of various court orders by Koehnen J. in his Contempt Reasons released on August 21, 2020.

m. In an endorsement dated September 30, 2020, Koehnen J. provided the following directions concerning the possibility of judgment being sought at the contempt sanctions hearing:

To the extent that the defendants are taken by surprise by this argument, I have granted them a one-month adjournment to prepare legal arguments in response. The range of possible legal arguments might include that judgment is possible, that judgment is entirely impossible as a sanction, that judgment cannot be rendered as a sanction without an adjudication on the merits or any variations thereof.

The point of the sanctions hearing is not, however, to argue the merits. The defendants are able to argue on the sanctions hearing that judgment on the merits is not appropriate without an adjudication on the merits. That does not require them to actually adjudicate the merits.

It was this last directive that ultimately led to the Court of Appeal’s decision to return this matter to a re-sentencing hearing.

n. Following a sanction hearing in November, 2020, Koehnen J. granted judgment against the Developer Defendants in the amount of $9 million as a sanction for their contempt, and alternatively sentenced them to six months of incarceration in his Sentencing Decision.

o. The Sentencing Decision provides further details as to why the third accounting and bookkeeping documents provided by the Developer Defendants (created after the fact) were not sufficient to purge their contempt (for example, at paras. 15-29), without which there were no mitigating factors (paras. 50 and 51). Other deficiencies in the purported compliance by the Developer Defendants with the Mareva and Disclosure Order (and other follow-on orders) were identified at paras. 30-44 of the Sentencing Decision.

p. In an endorsement dated July 26, 2021, after reaffirming that the Developer Defendants continued to be in breach of the court’s Mareva and Disclosure Order (and the follow-on orders), Koehnen J. ordered further third-party production (described as production that the plaintiffs were entitled to under the Mareva and Disclosure Order) to assist the plaintiffs in their attempts to trace what the defendants had done with their money.

q. An amended Statement of Claim was issued on August 5, 2021.

r. Anastasio delivered a Statement of Defence dated November 22, 2021. No Statement of Defence has been delivered by Hyman.

s. The Developer Defendants appealed the Sentencing Decision. The Court of Appeal for Ontario overturned the Sentencing Decision and remitted the matter back to another judge of the Ontario Superior Court of Justice to determine the appropriate sanction to be imposed on the Developer Defendants for their contempt. The Appeal Decision turned upon the determination (at para. 33) that if judgment was to be considered as a possible sanction for the finding of contempt “…the moving party should expect that there will be a more searching inquiry about the merits and that the respondent will be given an opportunity to respond to the merits.”

t. In a subsequent costs endorsement (Thrive Capital Management Ltd. v. Noble 1324, 2021 ONCA 846 ) released November 24, 2021, the Court of Appeal upheld the costs ordered payable by the Developer Defendants in connection with the finding that they were in contempt ($36,011.97) but set aside the costs awarded for the sanctions hearing and the action since that was being remitted back for a new sanctions hearing, which could lead to a different outcome. No costs were awarded to the appellants for the appeal.

u. The re-sentencing hearing was originally scheduled for March 1, 2022, based on an agreed timetable. It was adjourned to March 30, 2022 due to the failure of the Developer Defendants to adhere to the timetable. A further conditional peremptory adjournment was granted on March 30, 2022 to allow newly retained counsel for Mr. Hyman to get up to speed and file a factum. All parties were represented by counsel at the May 3, 2022 hearing.

Summary of Outcome

[8] The court’s declarations and orders are detailed at the end of these reasons. This is intended only as a summary.

[9] The Developer Defendants have still not fully purged their contempt in the two years since the Mareva and Disclosure Order was made, despite the many opportunities that have been afforded to them to do so. They have addressed certain deficiencies but their accounting for what happened to the plaintiffs’ funds, in particular, remains deficient.

[10] The court will not simply keep giving parties further chances to comply with court orders without any consequence. That does not serve the interests of justice, which require parties to demonstrate respect for and reasonable efforts to comply with the court’s orders and its process.

[11] A fine is not considered to be an effective or appropriate sanction in this case. While the court will, reluctantly, give the Developer Defendants one last chance to purge their contempt, first Hyman and Anastasio each shall serve a 30-day sentence in jail. There needs to be a meaningful consequence for the persistent failure to purge their contempt. Incarceration appears to be the only sanction that might achieve the sentencing objectives of civil contempt, of both compelling the compliance of the Developer Defendants with the Mareva and Disclosure Order and the follow-on orders and the general and specific deterrence for future instances of this type of civil contempt.

[12] In the meantime, Anastasio’s Statement of Defence is struck, any of the Developer Defendants who have not already been noted in default will be deemed to have been so noted as of the date of this endorsement. If they do not purge their contempt once and for all by the deadline indicated for them to do so at the end of this endorsement, the plaintiffs may move for judgment and shall at that time have the opportunity to prove the amount that they seek to be awarded. Conversely, if the Developer Defendants have purged their contempt, and upon satisfying the court that they have done so, they may seek leave of the court at that time to deliver defences to the Amended Statement of Claim.

Positions of the Parties

The Position of Developer Defendants

[13] The Developer Defendants do not dispute the finding of contempt that was made against them by Koehnen J. following the June 19, 2020 hearing. They maintain, however, that they have purged the contempt and that a modest fine would be an appropriate penalty for their previous contempt. The Developer Defendants say that they have now provided everything that is within their possession, control, or power that they were ordered to provide, and they have done everything that they are able to do, as required under the Mareva and Disclosure Order and follow-on orders.

[14] Further, the Developer Defendants argue that judgment is not an appropriate sanction for their contempt in the face of the defences that they have raised to each of the core allegations asserted against them by the plaintiffs, in that:

a. They assert that the plaintiffs’ representative, Mr. Singh, who was also the 100% owner of the plaintiff Thrive Capital Management Ltd. at the time, was aware of and approved or acquiesced in the assignment of purchase of the Brampton Property to 1234 Noble (in the place of 9010). Their assertion is based on emails that Mr. Singh was copied on about this. Thus, they contend that, regardless of what the rationale was for so doing and whether it was justified, the change in ownership of the Brampton Property and whatever implications it may have had for the plaintiffs’ intended security for their advances was authorized.

b. Based on an email exchange between lawyers dated June 12, 2019 dealing with a number of due diligence matters early on, they assert that:

i. it was understood and agreed that the funds provided by the plaintiffs could be used to pay the $2 million deposit for each property because the June 12, 2019 email chain suggests that this was a possible contemplated use of the plaintiffs’ funds; and

ii. it was understood and agreed that they would receive a development fee of $1.5 million per project, for a total of $3 million, that they could apply towards business or personal expenses, at their own discretion;

thereby leaving only $2 million of the $9 million of invested funds to be accounted for in terms of the alleged permitted uses in connection with the development.

c. They assert that Mr. Singh’s knowledge of and participation in the falsification of bank records exonerates them from any wrongdoing associated with that, or at least it raises a sufficient question about their culpability that it must be determined based on a full and complete evidentiary record at a trial. Anastasio also maintains that he was completely unaware of this falsification of records as a further defence to the assertion that the Developer Defendants misappropriation of funds was being covered up through the falsification of bank records.

[15] The Developer Defendants contend that, unless the court finds their defences to these core allegations to be blatantly unmeritorious, judgment on the plaintiffs’ $9 million claim is not an appropriate or proportionate sanction for their contempt, whether it has been purged or not. They maintain that this is not a summary judgment motion and they do not have to “put their best foot forward” to satisfy the merits aspect of this analysis.

The Position of the Plaintiffs

[16] The plaintiffs maintain that what the Developer Defendants say they have provided does not align with what they were ordered to provide, nor have they provided evidence to establish that what they have provided reflects all of the information and documents that they have or could obtain. Aside from the mis-matching of what was ordered and what has been provided or explained, Anastasio has also unilaterally adopted a $10,000 materiality threshold for the transactions that he has attempted to address in his (the fourth) accounting.

[17] The plaintiffs argue that anything less than complete satisfaction of the previous court orders is not sufficient, unless it is accompanied by evidence of the efforts undertaken to fulfill the Developer Defendants’ obligations and explanations for why those efforts fell short. The plaintiffs say that what has occurred is deficient. Instead of providing the accounting and other information that they were ordered to provide approximately two years ago, the plaintiffs maintain that the Developer Defendants have simply re-packaged disclosures previously made, which Koehnen J. has already ruled were not sufficient to purge their contempt.

[18] The plaintiffs maintain that the contempt has still not been purged and that there are no mitigating factors. They are asking for the same sanction as was ordered under the Sentencing Decision, which includes judgment (in an amount to be determined) plus substantial indemnity costs of both sentencing hearings and of the action.[^2] Alternatively, they ask for a six-month jail sentence for each of Hyman and Anastasio.

[19] The plaintiffs argue that, after undertaking a searching inquiry into the merits of the defences that the Developer Defendants have indicated they intend to advance, the court should find their defences to be unmeritorious and that the same outcome as was ordered in the Sentencing Decision is justified. The plaintiffs point to the incredulity of what the Developer Defendants have identified in response to the core allegations:

a. Virtually all of what the Developer Defendants assert as to the merits of their defences relate to the Brampton Property (the project of the 9010 company) and little if anything is proffered by way of defence to their conduct with respect to the Richmond Hill project of the 9011 company.

b. The defences raised depend upon alleged unsigned agreements and understandings said to be derived from email exchanges that are inconsistent with the signed shareholder agreements and acknowledged protections and security that the plaintiffs were to receive for their $9 million investment. The defendants maintain that merely copying a shareholder of one of the companies on emails indicating that title to a property is to be taken in the name of another company, with no context, discussion, or credible explanation as to why this needed to be done,[^3] or about how the agreed upon security to be given to the plaintiffs would be preserved, cannot amount to an agreement to change the written contractual arrangements between the parties. The contract required title to the Brampton Property to be taken in the name of 9010 and it contained entire agreement clauses and a requirement for amendments to be in writing.[^4]

c. The June 12, 2019 due diligence email exchange between lawyers refers to the use of funds advanced by the plaintiffs for deposits by a different bonded development company, Caliber Development Inc., and refers to development costs (with no mention of personal expenses) to be paid from the $1.5 million development “fee”. The plaintiffs contend that this is about a different deal than the one entered into and offends the entire agreement clauses in the signed shareholder agreements between the parties (for example at paras. 4.4, 5.5, and 7.6), which make no mention of the use of invested funds for deposits or of any development fees. At best, this email exchange could only account for a fraction of the funds advanced (the $2 million deposit and potentially some development fees up to a maximum of $1.5 million, out of the total $9 million invested). Further, this email does not purport to deal with the Richmond Hill Property at all.

d. The analysis of the banking records that the plaintiffs have obtained through third party production (summarized at Appendix B to the plaintiffs’ factum) and of the most recent accountings that have been provided by the Developer Defendants themselves (summarized at Appendix A to the plaintiffs’ factum), although not reconciled with each other, both demonstrate that the defendants (or parties related to them) received more than $3.6 million of the plaintiffs’ funds (approximately $1.9 million to Anastasio and his affiliates and $1.75 million to Hyman and his affiliates). The defendants now do not deny that they or parties related to them received and used at least some of these funds for their own personal benefit.

e. If Mr. Singh committed a fraud on the plaintiff companies and their bank that the Developer Defendants participated in and that assisted them in hiding their own misconduct, then their participation in that fraud and their misconduct is not excused or neutralized by someone else’s misconduct.

[20] Two years have passed without the proper disclosure and accounting, in the face of the Mareva and Disclosure Order and follow-on orders. The plaintiffs maintain that the Developer Defendants’ persistent and continuing contempt reinforces that the sanction of judgment for the return of the plaintiffs’ $9 million investment is the only option in the circumstances of this case.

[21] Alternatively, and as was sought at the first sanction hearing, the plaintiffs ask the court to impose the sanction of six-months incarceration upon the individual defendants, Hyman and Anastasio. The plaintiffs submit that incarceration is appropriate given the blatant, continuing, and inexplicable failure of the Developer Defendants to comply with the Mareva and Disclosure Order and the follow-on orders that provided them with detailed guidance about what the court expected of them.

Have the Developer Defendants Purged their Contempt?

[22] The Developer Defendants contend that they have purged their contempt. That assertion is a key aspect of their submissions regarding the appropriate sanction for what they would like the court to find were their past failings, now remedied.

[23] Conversely, the plaintiffs argue that the court need not look hard to satisfy itself that the Developer Defendants have still, two years after the original Mareva and Disclosure Order, not purged their contempt. They point to two examples of blatant failures:

a. a $10,000 materiality threshold that was arbitrarily adopted for transaction disclosures and accounting by Anastasio; and

b. the Developer Defendants’ continued abdication of responsibility for attempting to ascertain what happened to the funds that were paid out of the bank accounts of 9010 and 9011, as they were clearly directed to do under the Mareva and Disclosure Order, as clarified in the May 19, 2020 Order and Endorsement.

[24] In the latter regard, in his May 19, 2020 endorsement, Koehnen J. elaborated upon what was expected of the Developer Defendants, directing them to provide a full and detailed accounting of all funds deposited, withdrawn, paid out of or otherwise removed from the 9010 and 9011 bank accounts. At para. 8 he stated: “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.” The operative language of the ensuing order specified (at para. 4):

“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.”

[25] Two years later, this has still not been done. The efforts of the Developer Defendants were considered by Koehnen J. in his Contempt Reasons when he found that they had not purged this contempt months later. Very little, if anything, more has been disclosed by the Developer Defendants to fill in the gaps of the missing information since then.

[26] Some, in my view inexcusable, examples of this persistent non-compliance are found in the failure to disclose what Hyman’s company Hampshire and Associates Incorporated what it did with the $250,000 in funds that the accounting from Anastasio discloses were received by that company from the 9010 Royal Bank account. Nor has Anastasio ascertained (or apparently even asked) what his former spouse has done with the $150,000 that he acknowledges she was paid from the development bank account(s).

[27] Regardless of whether funds were paid directly to others from the accounts or were paid to the Developer Defendants and subsequently transferred to others, the Mareva and Disclosure Order and follow-on orders clearly require the Developer Defendants to account for what happened to those funds. At the very least, if they do not have direct knowledge about what happened to the funds after they were received by third parties, the Developer Defendants had an obligation to make reasonable efforts and inquiries to try to find out what happened to those funds, and to disclose what those efforts were. Instead, their evidence is clear that they have adopted the contrary position: that it is not up to them, but rather up to the plaintiffs, to make the inquiries of third party recipients to try to find out where the funds went.

[28] The importance of the accounting and disclosure about what was done with the funds is reinforced by the gaps that remain in the most recent fourth and fifth accountings that have been provided by the Developer Defendants. These confirm that approximately $1.75 million was paid to Hyman and his company Hampshire and other affiliates, while approximately $1.9 million was paid to Anastasio or people and entities related to him, for an aggregate total payment out to them of over $3.6 million.

[29] While not fully reconciled with the fourth and fifth accounting provided by the Developer Defendants, the plaintiffs’ review of the RBC banking records produced also discloses approximately $3.6 million having been paid to the defendants or their affiliates from these accounts and a further $5,348,846 having been paid to other recipients (including the $4 million in deposits for the two property purchases).

[30] Even according to their own understandings, the Developer Defendants appear to have received approximately $600,000 more than the total of $3 million in development fees that even they claim to have been entitled to receive. Nor has the use of the funds received by them been accounted for entirely. Dating as far back as May of 2020, the plaintiffs’ representative identified payments out from the 9010 RBC bank account of $694,842 and from the 9011 RBC bank account of $849,489 for which the explanations provided by the defendants were, and in many instances remain, absent or deficient.

[31] The Developer Defendants are correct that the accounting and disclosure exercise is just that and they do not have to prove the validity of their defences on the merits to satisfy their obligations under the Mareva and Disclosure Order and follow-on orders. However, what the accounting is supposed to do is provide the information about where the funds went. As Koehnen J. stated numerous times, the purpose of the accounting that was ordered (and the specific terms that were directed for compliance) was to enable the plaintiffs to determine what happened to the plaintiffs’ $9 million investment. Whether those distributions and uses of the plaintiffs’ funds were legitimate or permitted is a question for another day.

[32] The accounting and tracing exercise that was ordered does not depend upon a finding or proof of liability; it depends upon the court’s finding at the time the Mareva and Disclosure Order (April 24, 2020 endorsement) that:

The spiriting away of the principal assets plus the presentation of forged bank statements and the alleged failure to provide detailed information about what had occurred with the investors’ funds all creates a serious issue to be tried (at para. 12).

[33] After the Mareva and Disclosure Order was made, further specific findings were made that the accounting and disclosure provided up to the time of the contempt and original sentencing hearings was not sufficient to satisfy the requirements of the Mareva and Disclosure Order and follow-on orders.

[34] Certain of the noted deficiencies were eventually addressed. However, with respect to the accounting in particular, what the Developer Defendants appear to have done since the Sentencing Decision is to improve upon the form, or presentation, of the information and documents already available in accountings that were previously prepared. They have provided these accountings as exhibits to their affidavits filed on this motion: the fourth accounting was provided as an exhibit to Anastasio’s responding affidavit dated March 4, 2022 and the fifth accounting was provided as an exhibit to Hyman’s responding affidavit dated March 8, 2022. These were not produced until after the initial March 1, 2022 re-sentencing hearing had already been adjourned for the first time to March 30, 2022.

[35] The fourth and fifth accountings are organized differently and have synthesized previously available information. However, the previously noted deficiencies were found by the court to be in respect of the substance, not the form, of the prior accountings. Their substance has not been materially improved upon since those findings were made. The recently filed evidence describing these accountings demonstrates why they are lacking:

a. Anastasio describes in his affidavit that the fourth accounting accounts for the transactions in the five bank accounts over which he had signing authority. He says his accounting shows the distributions of the plaintiffs’ funds out of these bank accounts and he asserts that the plaintiffs can make inquiries of any other recipients to find out what happened to the monies that they received. There is no suggestion or indication that Anastasio has made any effort or attempt to determine what any other recipient did with the money they received.

b. Hyman describes in his affidavit that the “detailed” fifth accounting that he has produced was prepared by an accounting professional[^5] based upon the RBC bank statements that all parties have for the 9010 and 9011 bank accounts. The information contained in those bank records has been available since the plaintiffs’ compelled their production from the banks early on in this proceeding. Those records do not assist in the exercise of ascertaining what happened to the funds after they left those accounts. There is no suggestion that any effort or attempt was made to determine what any other recipient did with the money they received as part of this last accounting exercise.

[36] The Developer Defendants added columns purporting to correspond with the ordered disclosures and referenced previously disclosed documents and information that had already been clearly and unequivocally ruled to be insufficient by Koehnen J. in his Contempt Reasons and in his Sentencing Decision, among other places. The latest accountings do not meaningfully address the previously noted deficiencies. In particular, they do not, contrary to paragraph 4 of the May 19, 2020 endorsement: “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.”

[37] Nor does the fact that the plaintiffs have gone to the extra trouble of adding as defendants the recipients of funds who have been identified largely through the plaintiffs’ own efforts relieve the Developer Defendants from their obligations under the Mareva and Disclosure Order. They are obligated to account for what happened to these funds, or at least make reasonable efforts to do so, including efforts to determine what happened to funds that flowed through them and their affiliates and paid out to others. Their evidence to date gives no indication that they have done this.

[38] Further, some of the plaintiffs’ invested funds remain unaccounted for even under the most recent fourth and fifth accountings that the Developer Defendants have provided. Neither the unilaterally adopted $10,000 materiality threshold nor any other excuse proffered by the Developer Defendants relieve them of their obligation to do this.

[39] The Developer Defendants are accused of financial fraud and misappropriation of the plaintiffs’ funds. The plaintiffs satisfied the court that the Mareva and Disclosure Order, an extraordinary order made at the outset of the proceeding, was appropriate. An accounting and tracing was required as part of that order. The Developer Defendants have not properly accounted for those funds in the two years since the Mareva and Disclosure Order was made. The concern about the delay in compliance is obvious. The purpose of a Mareva order is to prevent asset dissipation pending trial. Non-compliance defeats that purpose and undermines the court’s process.

[40] Some additional disclosure has been provided by the Developer Defendants in other areas (outside of the accounting), but it was only provided after the Developer Defendants were admonished for their failure to comply with certain requirements of the Mareva and Disclosure Order. For example, they do now finally appear to have complied with the requirement that they provide contact information for the direct recipients of funds from the 9010 and 9011 bank accounts. While their timing and motivation for so doing does not demonstrate a high level of respect for the court’s process, this aspect of the disclosure obligations now no longer appears to be deficient.

[41] Without going into every example of continuing non-compliance with the Mareva and Disclosure Order, and even if the Developer Defendants are taken at their word that they do not have any additional supporting documents to produce as part of the accounting exercise (beyond those provided, most of which have come from third party production orders obtained by the plaintiffs), a summary of some other persistent examples are:

a. Hyman acknowledges that he has still not produced the metadata for electronic records that he promised to provide in a letter dated August 31, 2020. He places the blame for this on his former lawyer. However, as of the date of the sanction re-hearing, the metadata had still not been retrieved from the former lawyer and produced.

b. Although the plaintiffs have done a lot of the work for the Developer Defendants through third-party production motions, there still remain missing bank and credit card statements that could be obtained from third parties and the evidence about the efforts of the Developer Defendants to obtain these records is lacking or deficient.

c. The Developer Defendants appear not to have attempted to obtain lost texts or emails from service providers (to address the most recent excuses of lost or damaged phones and devices to address these missing records ordered produced).

[42] In reply submissions during oral argument, the court was asked to draw an inference that the Developer Defendants have made their best efforts to comply with the Mareva and Disclosure Order and the follow-on orders. They offer no evidence of these efforts to obtain information from third parties, or the responses they received. I am not satisfied that there is a factual foundation from which such an inference could be drawn. I decline to do so.

[43] To the contrary, in the absence of any evidence from the Developer Defendants that they do not have the ability to obtain information and documents from the third parties into whose hands the plaintiffs’ funds were diverted, it is open to me to draw an inference that the Developer Defendants still have some access to information about these unaccounted for funds, and I do so infer.

[44] The above confirms that two years have passed and the Developer Defendants have, remarkably, still not fully purged their contempt. They have done too little, too late.

[45] This finding is important to the sanction, which is discussed in the next section. The position of the Developer Defendants regarding the appropriate sanction is very much tied to their insistence that they have now finally purged their contempt. The evidence in the record before me does not support such a finding.

Available Sanctions for Contempt

Analytical Framework for Contempt Sanctions

[46] At the penalty phase of a contempt hearing, courts have a wide discretion. Rule 60.11(5) of the Rules of Civil Procedure, R.RO. 1990, Reg. 194, provides that the court may make such order as is just, including that the judge may order the contemnor:

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

(b) be imprisoned if the person fails to comply with a term of the order;

(c) pay a fine;

(d) do or refrain from doing an act;

(e) pay such costs as are just; and

(f) comply with any other order that the judge considers necessary,

and may grant leave to issue a writ of sequestration under Rule 60.09 against the person's property.

[47] In the Sentencing Decision, the framework for analyzing contempt sanctions was reviewed and applied. The Court of Appeal did not overturn the sanction imposed and order this re-sentencing hearing because of any concern about this part of the analysis by Koehnen J. It is equally applicable to this re-sentencing hearing. I adopt the following analysis:

[46] Contempt undermines the authority of the court. Serious sanctions are warranted for contempt because contempt is an attack on our fundamental social order. We organize our society based on the rule of law. At its most basic level, that means that we do not allow individuals to resort to violence or coercion to enforce their rights but depend on the courts to enforce rights. That only works if people obey court orders. People who flout court orders put our entire system of social order at risk. If a sufficient number of people simply ignore court orders, people will stop using courts as a peaceful means of resolving disputes and will begin using coercion and violence. In that light, I cannot understate the seriousness of the Defendants’ continued contempt of court.

[47] The goal in sentencing is to impose a penalty that will be sufficiently serious that it persuades the Defendants to comply [The Law Society of Upper Canada v. Hatzitrifonos 2018 ONSC 3719 at para. 8] and persuades the general public that it is preferable to comply with court orders than to ignore them. [Astley v. Verdun, 2013 ONSC 6734, at para. 19, aff’d 2014 ONCA 668. 2018 ONSC 6631 at para. 44; Pronesti v. 1309395 Ontario Ltd. 2015 ONSC 1139 at para. 34, citing Chiang (Trustee of) v. Chiang 2009 ONCA 3 at para. 11] As the Court of Appeal explained in Boily:

The purpose of a penalty for civil contempt is to enforce compliance with a court order and to ensure societal respect for the courts […]. The remedy for civil contempt is designed not only to enforce the rights of a private party […] but also to enforce the efficacy of the process of the court itself. [ 2014 ONCA 574 at para. 79. See also Business Development Bank of Canada v. Cavalon Inc. 2017 ONCA 663]

[48] When considering an appropriate penalty for contempt, the court should consider the following:

(i) the presence of mitigating or aggravating factors;

(ii) the imposition of similar sentences in similar circumstances;

(iii) the deterrence and denunciation of future unlawful conduct;

(iv) the proportionality of the penalty to the wrongdoing; and

(v) the reasonableness of incarceration and the availability of other penalties.

Boily at para. 90; [2008 63236 (ON SC)] at para. 11; Chiang, at para. 88; Astley, at paras. 41-43; affirmed: 2014 ONCA 668.]

Consideration of Sentencing Factors in this Case

[48] The Developer Defendants put forward a list of seven mitigating factors at the first sanctions hearing. They were all rejected. At paras. 50 and 53 of the Sentencing Decision, the court had this to say:

[50] While those may be mitigating factors at law, they do not amount to mitigating factors here. As noted earlier, the contemnors have not purged their contempt and have not made legitimate efforts to do so. While this might be the contemnors first conviction for contempt, they have engaged in multiple, consecutive acts of contempt over a prolonged period of time. They have failed to comply with court orders even after being told that they were in breach and after further endorsements spelled out exactly what was required to comply. While Messrs. Hyman and Anastasio purported to apologize at the hearing, the apologies were meaningless, empty words by which they hoped to avoid the adverse consequences of their continued contempt.

[53] Messrs. Hyman and Anastasio blatantly and intentionally violated court orders by continuing their contempt after the breaches were explained to them and after they were told what they needed to do to comply. Their contempt continues up to today. There is no remorse because if there were, they could cure the contempt. They have provided a string of implausible explanations based solely on bald allegations and devoid of objective evidence. They have personally profited to the tune of at least $3,000,000 by continuing to hide what they did with the plaintiffs’ funds. The continued breach caused material harm to the plaintiffs because it makes their funds ever more difficult to trace and recover.

[49] At the re-sentencing hearing, the Developer Defendants placed much emphasis on their claims that they have now finally purged their contempt. However, in my view, the situation remains virtually unchanged for the intents and the purposes of this re-sentencing hearing insofar as the accounting is concerned. I have found that any incremental steps taken towards remedying deficiencies previously noted were insufficient to fully or even materially purge the contempt, and the very fact that much of the same deficiencies persist is, if anything, a further aggravating factor.

[50] Previous orders required the Developer Defendants to deposit their passports for safekeeping with their lawyers and did not grant them a living allowance from frozen funds while they were in default of prior court orders. I do not find, as the defendants have suggested I do, that the terms of these previous orders are a mitigating factor that warrants any reduction in the sanction for their contempt. That same argument was made, unsuccessfully, in the Sentencing Decision.

[51] There is no need for me to repeat the rest of the analysis of the factors that were reviewed in the Sentencing Decision at paras. 54 to 57. The same arguments were advanced at the re-sentencing hearing and the same analysis applies. The same apologies were offered at the re-sentencing hearing through their counsel. Their actions speak loudly and demonstrate very little contrition on their parts.

[52] Having considered all of these factors, I have come to the conclusion that the circumstances of this case warrant an onerous sanction.

[53] This is a re-sentencing of a finding of contempt dating back two years. The plaintiffs have provided examples of alleged further contempt by the Developer Defendants by their actions or inactions since the original finding of contempt. There is no clear authority that has been identified that would allow me to consider the further alleged contempt and a further contempt hearing has not been held. These subsequent alleged incidents of contempt might be considered aggravating factors. However, it is not necessary to evaluate and consider these examples of further contempt in my analysis or decision and I have reached my decision without regard to these further alleged incidents of contempt.

[54] Civil contempt orders serve a dual purpose. One purpose is practical and focused on the parties before the court: seeking to ensure that the contemnor complies with relevant court orders. A sentence for civil contempt is intended to be coercive and persuasive, designed to enforce the rights of a private party. See Mercedes-Benz Financial v. Kovacevic, 2009 9423 (ON SC), [2009] O.J. No. 888, at paras. 7-8. The other purpose is focused on the public at large: signaling that the court and its processes, including court orders, are to be respected.

[55] The Developer Defendants have been given many chances to purge their contempt including prior to and at the Contempt Hearing, at the first sentencing hearing, at the appeal, and now at this re-sentencing hearing. While the court’s focus still remains on the primary objective of compelling compliance with the Mareva and Disclosure Order, the deterrence objective cannot be ignored. The court not only must show the Developer Defendants, but also must show the public at large, that eventually the chances will run out. Even if there is a tendency to show some leniency in cases of civil contempt, every case has a breaking point, and it has been reached in this one.

Incarceration for Contempt

[56] In the alternative to their request for judgment on their claim, the plaintiffs ask for a six-month custodial sentence consistent with the sentences imposed in Sussex Group v. Sylvester (2002), 2002 27188 (ON SC), 62 O.R. (3d) 123 and Milligan v. Lech, 2004 4792 (Ont. S.C.), aff'd 2006 39457 (Ont. C.A.) which both involve contempt in a fraud case.

[57] A custodial sentence is reserved for the most serious contempt or where there is no choice but to jail a contemnor in order to coerce compliance or to express deterrence and denunciation: see Pronesti, at para. 38; Astley v. Verdun, 2014 ONSC 7136, at paras. 19-20.

[58] The case of Sussex Group v. Sylvester relied upon by the plaintiffs involved a refusal to produce documents over many months. The Court imposed a sentence of six-months imprisonment on a first offender who failed to comply with court orders requiring him to produce corporate records. The Court noted that the contempt was one which continued over a period of many months, the contemnor showed no remorse, and the contemptuous conduct threatened the assets of the company and the investments of investors.

[59] These factors are all present in this case. First, for the reasons indicated earlier in this decision, the court has found that the contempt has continued over a period of many months. Second, the remorse indicated through counsel, who simply repeated what had been said at the original sanction hearing, has already been found by this court to have been less than genuine. It is hard to believe the Developer Defendants are remorseful when they continue to challenge the earlier findings of this court rather than just do what was ordered. Third, at least some of the plaintiffs’ investment remains at risk of dissipation.

[60] In Milligan, another case relied upon by the plaintiffs, the defendant was accused of fraud and the Court sentenced the defendant to eight months in prison for failing to produce documents and attend examinations. In determining the appropriate sentence, the Court considered the defendants' "open, willful, continuous and flagrant violation of court orders without regard to the effect that may have on the respect to be accorded to them": Milligan, at para. 2.

[61] Having regard to my earlier conclusion that this is a case that warrants an onerous sanction, this is one of those cases, like Sussex and Milligan, in which it would be just to impose a penalty of incarceration even though this case is the first one in which they have been found to be in contempt.

[62] The Developer Defendants submit that to order incarceration, the court must find that a fine is ineffectual, that incarceration is necessary because of the potential for serious harm or prejudice to the plaintiffs, and that there is a need for both specific and general deterrence before making an order for incarceration.

[63] For a fine to be appropriate as a penalty it needs to have some teeth. In a case such as this, the fine would need to be significant for it to act as an incentive for compliance and as a general deterrent. The objectives of sentencing will not be served by the “modest” fine that the Developer Defendants propose of $1,000 to $10,000. This amount does not even meet the materiality threshold that Anastasio arbitrarily applied to his accounting. If I had ordered a fine, it would have to be a minimum of $300,000 payable by each of Hyman and Anastasio to be an effective deterrent and to reflect the seriousness of the remaining unaccounted for funds.

[64] However, the Developer Defendants do not appear to have ready access to funds to pay a fine in the amount that would be required in this case to achieve the objectives of compliance and deterrence. Their assets have been frozen. They have indicated that they will borrow from friends and family to satisfy any modest fine imposed against them. They did so to satisfy the costs awards against them to date. The objectives of sentencing will not be served by a fine that is unlikely to be paid by them.

[65] Incarceration is the best remedy to achieve the sentencing objectives for civil contempt, of coercion and deterrence. The Developer Defendants do not appear to be incentivized to purge their contempt by the threat of incarceration, which has been hanging over them for the past two years. However, actually sending them to jail, rather than just threatening it, may cause them to take this matter more seriously and comply.

[66] I find that the penalty of incarceration will also serve the secondary objectives of both specific and general deterrence and denunciation of the flagrant and persistent disregard of court orders for production and disclosure of transactions and dealings that go to the heart of the allegations in this case.

[67] Hyman submits that incarceration is inappropriate because of the COVID-19 pandemic. They rely on Borer v. Nelson, 2020 ONSC 4259, at para. 11, which states:

Finally, the court should consider sanctions other than jail: Criminal Code, s. 718(2) (d) and (e); Sussex Group v. Sylvester, 2002 27188 (ON SC), [2002] O.J. No. 4350, 62 O.R. (3d) 123 (Sup.Ct.) at paras. 80-82. This is a particularly relevant consideration given the current COVID-19 health crisis. At a time when public health authorities are prohibiting gatherings of more than ten people at a time, sending someone to live with others in a congregated setting should only be done when there is no reasonable alternative.

[68] That case was decided very early on in the COVID-19 pandemic. More recent cases have not adopted the same approach when considering the collateral consequences of sentencing: see for example R v. Milne, 2020 BCSC 2101, at para. 134. I have considered this argument but do not consider the risk of contracting COVID-19 “at large” to be a collateral consequence that would make incarceration inappropriate in the absence of any supporting evidence of particular health risks to these individuals. The same argument was raised at the first contempt sentencing hearing and Koehnen J. noted that the Developer Defendants had not provided support or back up for their assertions of medical concerns or issues. There continues to be no evidence of such.

[69] I recognize that incarceration is a penalty of last resort for civil contempt and that Hyman and Anastasio are first offenders. However, I have determined that no other penalty on its own will be a sufficient sanction. I have found that the contempt has not been purged, it was serious, and it was deliberate, or at least demonstrated wilful disregard for the court orders: see Business Development Bank of Canada v. Cavalon Inc., 2017 ONCA 663, 416 D.L.R. (4th) 269, at paras. 84 and 89.

[70] I have concluded that incarceration is an appropriate sanction for the contempt of the Developer Defendants. It is proportionate given the many chances that have already been afforded to the Developer Defendants and their continued attempts to deflect responsibility.

Length of Incarceration

[71] Koehnen J. found in his Sentencing Decision that if the sanction of judgment for the full amount of the plaintiffs’ claim was in error, he would have imposed a six-month jail sentence.

[72] In the Appeal Decision, the Court of Appeal noted this alternative sentence indicated by the motion judge, but did not adopt, endorse or directly address it. Rather, at para. 36, the Court of Appeal stated that the matter was being remitted to another judge to determine the appropriate sanction to be imposed upon the appellants. The court stated that since Koehnen J. has expressed his views on the appropriate sanction “the better course would be to have a different judge decide what should follow the finding of contempt, depending on the relief sought and pleaded.”

[73] I do not consider this to be a situation that invokes the application of horizontal stare decisis and I do not consider myself to be bound by the alternative sentence that was suggested by Koehnen J. of a six-month jail sentence. I have considered the penalty for the Developer Defendants’ contempt afresh as directed by the Court of Appeal.

[74] Cases have been cited by the defendants in which lesser periods of incarceration were the imposed sanction for civil contempt, such as: Pronesti (30 days); Astley v. Verdun, 2013 ONSC 6734, 118 O.R. (3d) 43, aff’d 2014 ONCA 668 (90 days); and Bush v. Mereshensky, 2007 ONCA 679, 229 O.A.C. 200 (60 days).

[75] In Pronesti, one of the defendants was sentenced to 30 days house arrest and the other was sentenced to six days in a provincial correctional institution, intermittently. The defendants failed to mitigate their wrongdoing, did not show remorse, and their contempt of court orders required multiple attendances. The defendants did provide some information. They were described as having “done more than nothing”: at para. 40. But they did not fulfill the court’s orders or show a bona fide effort to do so with any purpose or urgency.

[76] In Bush, the appellant acted in “flagrant disregard” of court orders” and deliberately and knowingly breached the court orders. His conduct was found to have gone beyond failing to provide a full accounting and to include failing to pay money into the court, failing to pay costs orders, and failing to show up for questioning. He was given a sentence of 60 days imprisonment.

[77] In one of the cases that the plaintiffs assert has a similar factual matrix to this one, in which defendants claimed that it was unclear what they were required to do to comply with a Mareva order, and failed to do so, the court struck their statement of defence and sentenced the principal to 90 days of imprisonment. That sentence was upheld by the Court of Appeal: see Trade Capital Finance Corp. v. Cook, 2017 ONCA 281, at paras. 16, 19-23, leave to appeal refused, 2017 82303.

[78] I have considered the relevant factors including the variable sentences imposed in other cases of civil contempt involving disclosure failures, the nature and extent of the failures, and the other factors that existed in those cases. I have concluded that the appropriate period of incarceration for the past and continuing contempt of the Developer Defendants is a period of 30 days of incarceration of each of Hyman and Anastasio.

[79] I consider this to be the minimum sentence that will serve the objectives of deterrence, denunciation, and, most importantly, coercing the Developer Defendants’ compliance with the Mareva and Disclosure Order and follow-on orders.

[80] Upon their release, the Developer Defendants will then be given a further opportunity to purge their contempt once and for all, by making and documenting their efforts to ascertain and account for what happened to the plaintiffs’ funds.

[81] With respect to the accounting exercise, their compliance can either be achieved by: (i) providing the detailed explanations of what happened to the plaintiffs’ money that they were ordered to provide (e.g. what they themselves spent the funds they received on or, to the extent some of the funds were used to satisfy project-specific obligations, the details of such and all supporting documents); or (ii) if they do not themselves have direct knowledge of what happened to the funds that were paid out of the 9010 and 9011 bank accounts and ended up in the hands of third parties, at a minimum, they are expected to make inquiries of the recipients of any such funds and to provide particulars of when those inquiries are made, when they followed-up and any responses received, and copies of these communications if they are in writing.

[82] With respect to the other compliance deficiencies noted in paragraph 41 herein, the required steps to purge those should be self-evident.

[83] The Developer Defendants shall deliver their further compliance to the plaintiffs and to the court by no later than September 7, 2022. They shall appear before me in person on September 14, 2022 at which time I will provide my assessment of whether they have finally sufficiently purged their contempt. If not, they may at that time be remanded into custody for a further period of incarceration, and/or default judgment may be granted against them (as provided for in the next section).

Judgment for Contempt

The Court’s Jurisdiction to Award Judgment for Civil Contempt

[84] I have decided to impose a sentence of incarceration for the contempt of the Developer Defendants. This was the alternative sanction that the plaintiffs requested. The primary sanction that they asked the court to impose was a judgment on their claim.

[85] The court’s jurisdiction to grant judgment as a remedy for contempt is not disputed. The court’s authority to strike out a statement of defence or bar a litigant from filing a defence was confirmed in the Appeal Decision at paras. 24 and 33.

[86] The court’s discretion to make any order as is just upon a finding of contempt under r. 60.11(5) has been held to permit the court to strike out a party's defence and grant judgment when a party commits contempt: see Business Development Bank of Canada v. Cavalon Inc., 2016 ONSC 6825, at para 39, aff'd 2017 ONCA 663, 416 D.L.R. (4th) 269; State Farm Insurance Company v. Brijlal, 2011 ONSC 652; Macklem v. L'Ecuyer, 2010 ONSC 6382.

[87] Rule 60.12 expressly contemplates that the court may strike out a party's defence as one of the sanctions available in the exercise of the court’s discretion. The available sanctions have been held to include the granting of judgment when a party fails to comply with an interlocutory order: see also Falcon Lumber Limited v. 2480375 Ontario Inc. (GN Mouldings and Doors), 2020 ONCA 310, at paras. 47 and 79.

The Searching Inquiry About the Merits

[88] In the Appeal Decision, the concern that ultimately led to this re-sentencing hearing was that, if judgment was to be considered as a possible sanction for the finding of contempt “the moving party should expect that there will be a more searching inquiry about the merits and that the respondent will be given an opportunity to respond to the merits”: at para. 33. In determining whether to strike a pleading and grant judgment, the Court of Appeal directed (at para. 34) that the Developer Defendants should be given some opportunity to respond to the merits of the claims against them.

[89] In his September 30, 2020 endorsement prior to the first contempt sentencing hearing, Koehnen J. stated that:

The range of possible legal arguments might include that judgment is possible, that judgment is entirely impossible as a sanction, that judgment cannot be rendered as a sanction without an adjudication on the merits or any variations thereof. The point of the sanctions hearing is not, however, to argue the merits. The defendants are able to argue on the sanctions hearing that judgment on the merits is not appropriate without an adjudication on the merits. That does not require them to actually adjudicate the merits.

[90] It was this directive that ultimately led to the Court of Appeal’s decision to return this matter to a re-sentencing hearing.

[91] A significant amount of time was devoted in the parties’ written and oral submissions to the merits of the defences raised by the Developer Defendants (Anastasio in his Statement of Defence and affidavit and Hyman in his affidavit, by which he asserts the same or similar defences). This was in response to the directive in the Appeal Decision that there should be a “searching inquiry” about the merits and that the defendants should be afforded the opportunity to respond to the merits of the plaintiffs’ claims before judgment is granted as a sanction for contempt. That directive from the Court of Appeal did not provide much guidance as to what the merits test should be.

[92] The plaintiffs have already satisfied this court that there is a serious issue to be tried on the merits of their claims (in order to obtain and continue the Mareva and Disclosure Order). Both defendants have nonetheless challenged the merits of the plaintiffs’ claims. The defendants have referred to another action in which the plaintiffs are among the defendants alleged to have misappropriated investment funds and it is also alleged that the funds at issue in this case do not belong to the plaintiffs (Riar v. Khudal et al). I have not been taken to any findings on the merits of that other case and I do not consider its mere existence to detract from the finding already made in this case that the plaintiffs have raised a serious issue on the merits of their claims in this case. That was not the subject of any appeal and I do not consider it to be open for reconsideration.

[93] In any event, my interpretation of the “searching inquiry” that the Court of Appeal has directed be undertaken is that it is to be focussed on the merits of the defences raised in response to the claims.

[94] The court’s examination of the merits of the defences in Koohestani v. Mahmood, 2015 ONCA 56, 124 O.R. (3d) 205, at para. 58, offered the following commentary on two extremes:

First, the action should be examined with particular attention to the merits of the defence: Bell ExpressVu, at para 36. The pleading and any evidence relevant to the defence may demonstrate a strong defence supporting the conclusion that the interests of justice warranted finding another way to sanction the misconduct. On the other hand, a blatantly unmeritorious defence may give rise to the inference that the defendant's refusal to comply with a court order is part of a deliberate strategy to delay a decision on the merits -- conduct that may justify the imposition of a more severe sanction.

[95] I agree with the Developer Defendants that the merits threshold for defeating a request for judgment as a sanction for contempt is low.

[96] The Developer Defendants say that unless the defences they have raised are found to be blatantly unmeritorious, judgment should not be granted. They suggest that all the court needs to be satisfied of at this stage is that their defences are not pure fiction based on bald denials. They maintain that the court need not critically examine the evidence proffered in support of the defences, as long as there is some evidence. This would require that their defences nonetheless have an air of reality to them.

[97] Even all that they have asserted is accepted, despite the frailties and incredulities of certain aspects of their evidence, there is still a gap in their defences which fail to address the entirety of the plaintiffs’ claims. Those are outlined earlier in these reasons. The searching inquiry that I have made into the defences raised is not very promising from the Developer Defendants’ perspective. I agree with the plaintiffs that, overall, the defences raised by the pleadings and evidence of Developer Defendants are weak at best. Although some of the defences raised may be more viable than others, the defences do not credibly deal with the entirety of the plaintiffs’ claims; however, but some may be on slightly stronger footing than others. I would not go so far to say that their defences are all blatantly unmeritorious, but some may be and others are borderline at best.

[98] While the defences do not raise a strong impetus to serve the interests of justice by finding some other way to sanction the misconduct (other than by granting judgment), there is enough there on at least some of the points for at least some of the amounts claimed that I am inclined to allow the case to be determined on its merits in the normal course if the Developer Defendants can once and for all demonstrate their compliance with the Mareva and Disclosure Order. However, given the history of this matter, I am not prepared to give the Developer Defendants a free pass. They are going to have to demonstrate that they want and deserve this chance by serving their jail sentences and then purging their contempt once and for all, in the manner that has been provided for earlier in these reasons.

Striking the Defences/Noting in Default

[99] In Falcon Lumber, at para. 57, the Court of Appeal set out factors the court should consider when exercising its discretion to strike out a pleading for non-compliance with disclosure and production obligations:

a. The remedy is not restricted to "last resort" situations;

b. Whether the failure is deliberate;

c. Whether the failure is clear and unequivocal;

d. Whether the defaulting party has a reasonable explanation for its failure to comply;

e. Whether the substance of the default is material;

f. The extent to which the default remains outstanding:

g. The impact on the ability to do justice in the particular case;

h. The merits of the claim or defence may play only a limited role;

i. The extent to which the defaulting party has increased the non-defaulting party's costs; and,

j. The extent to which the default has delayed an adjudication of the case on its merits.

[100] Most of these factors are present in this case, such as:

a. I have already indicated the reasons for my finding that the contempt has not been purged.

b. The Developer Defendants have not proffered a credible or consistent explanation for their past and continuing contempt. After so many opportunities have been afforded to them, the only reasonable inference is that it is deliberate. They would prefer to be in default than to disclose what has been ordered of them.

c. Their contempt is clear and unequivocal. If there was any doubt about what was required of them, it was clearly laid out in the follow-on orders, and they still have not complied.

d. Their explanations are either lacking entirely, incomplete, or fraught with inconsistencies. None appear to be reasonable except possibly the assertion that they do not have any more documents than what have been produced. The production occurred largely through the plaintiffs’ efforts to obtain these documents from third parties (a state of affairs that will likely not serve them well if they were to try to defend this case on the merits).

e. The substance of their default is material. The ordered accounting and disclosure goes to the very heart of the plaintiffs’ claims, and the court’s ability to do justice in the case.

f. The delay is prejudicial to the plaintiffs’ ability to trace their funds.

[101] These tie into the principled considerations that the Developer Defendants indicate the court’s exercise of its discretion should be predicated on, including consideration of the following:

a. Whether to impose a drastic or some lesser remedy;

b. The impact of the default on the court’s ability to do justice;

c. Whether the contemnor has failed or refused to be bound by the rules thereby abandoning the right of access to the court; and

d. Whether the party remains in default at the time of the sanction hearing.

See Starland Contracting Inc. v. 1581518 Ontario Ltd., 2009 30449 (Ont. Div. Ct.)

[102] The court is at the point where a remedy of last resort is needed for the court to do justice in this case. A party’s failure to fulfill their disclosure obligations under a Mareva order impedes the ability of our civil justice system to provide fair, timely, and cost-effective adjudication of the merits of a civil dispute in the same way that defaulting on documentary disclosure and production obligations does. I do not agree with the Developer Defendant’s suggested distinction in this regard from the principles that were animating the Court of Appeal’s decision in Falcon Lumber (at para. 54). Disclosure pursuant to a Mareva order is important, just as discovery disclosure is important.

[103] While I am not bound by Koehnen J.’s findings in the Sentencing Decision (at paras. 67-68) regarding the existence of these factors, it is not a coincidence that I have found them to exist given my finding that the Developer Defendants have not purged their contempt.

[104] I have no difficulty in ordering that Anastasio’s Statement of Defence be struck. Hyman has not filed a statement of defence. All of the Developer Defendants remain in default of the Mareva and Disclosure Order and the follow-on orders. They shall all be deemed to have been noted in default as of the date of this decision, unless the plaintiffs have previously noted them in default, in which case the date of the earlier noting in default shall prevail.

[105] The Developer Defendants may apply to the court for leave, in the case of Anastasio to re-file and in the case of Hyman to file, a Statement of Defence in response to the Statement of Claim against them (on behalf of themselves and their affiliated companies who comprise the Developer Defendants) after and only if they purge their contempt by doing the things that have been identified in paras. 81 and 41(a) to (c) of this decision as still being outstanding.

Default Judgment

[106] If I determine that the Developer Defendants have failed to do what is required of them within the time that the court affords them following the period (or periods) of their incarceration, the plaintiffs may move for default judgment. That motion should be booked before me if my schedule permits.

[107] This approach addresses the request that the plaintiffs made on this motion to come back to make further submissions on the appropriate amount of the judgment.[^6] That is something that the plaintiffs will have to satisfy the court of on a motion for default judgment and that is the appropriate forum in which to undertake that exercise.

[108] The end result of the sanctions for the contempt of the Developer Defendants may be judgment against them for the full amount of the plaintiffs’ claim. If that result transpires, that is entirely appropriate and within the court’s contemplation and jurisdiction to grant. In the particular circumstances of this case, I have determined that there are other less extreme sanctions that may serve the objectives of the court while at the same time permitting the Developer Defendants to advance their defences, however weak they appear to be. But first, they must purge and be sanctioned for their contempt (by serving their incarceration time) and demonstrate that they are prepared to pay the price for their disregard of the court’s process before they will be permitted to enjoy that privilege.

Sanction for Contempt in this Case

[109] The following declarations and orders are made:

a. The Developer Defendants have still not purged their contempt. The following remains outstanding:

i. Some of the plaintiffs’ funds remain unaccounted for.

ii. Hyman has still not produced the metadata for electronic records that he promised to provide in a letter dated August 31, 2020.

iii. There still remain missing bank and credit card statements that need to be obtained from third parties.

iv. The Developer Defendants appear not to have attempted to obtain lost texts or emails from service providers.

b. I find that incarceration is the appropriate sanction and a fine would be ineffectual. I sentence Giuseppe Anastasio and Michael Hyman each to serve 30 days in a provincial correctional institution for their contempt of the Mareva and Disclosure Order and follow-on orders, commencing immediately upon the conclusion of today’s hearing.

c. The Developer Defendants remain under the obligation to comply with the Mareva and Disclosure Order and follow-on orders.

a. With respect to the accounting exercise, their compliance can either be achieved by: (i) providing the detailed explanations of what happened to the plaintiffs’ money that they were ordered to provide (e.g. what they themselves spent the funds they received on or, to the extent some of the funds were used to satisfy project-specific obligations, the details of such and all supporting documents); or (ii) if they do not themselves have direct knowledge of what happened to the funds that were paid out of the 9010 and 9011 bank accounts and ended up in the hands of third parties, at a minimum, they are expected to make inquiries of the recipients of any such funds and to provide particulars of when those inquiries are made, when they followed-up and any responses received, and copies of these communications if they are in writing.

b. With respect to the other compliance deficiencies noted in paragraph 41 herein, the required steps to purge those should be self-evident.

d. To that end, upon their release from jail, if they wish to avoid a further period of incarceration and/or default judgment against them, the Developer Defendants must demonstrate their compliance with the Mareva and Disclosure Order and follow-on orders, and specifically provide the remaining outstanding accounting and other information as outlined in sub-paragraph (a) items (i) to (iv) herein. The Developer Defendants shall have until September 7, 2022 to provide evidence to the court that they have done so, and shall return to court to appear before me in person on September 14, 2022, at which time they may be subject to further sanction if deficiencies remain.

e. The court may monitor compliance by means of appearances which may be scheduled by the plaintiffs or by the court on its own initiative.

f. In the meantime,

a. Anastasio’s Statement of Defence is struck.

b. All of the Developer Defendants shall all be deemed to have been noted in default as of the date of this decision, unless the plaintiffs have previously noted them in default, in which case the date of the earlier noting in default shall prevail.

g. The Developer Defendants may apply to the court for leave, in the case of Anastasio to re-file and in the case of any others, to file, a Statement of Defence in response to the Statement of Claim against them (on behalf of themselves and their affiliated companies who comprise the Developer Defendants) after and only if they purge their contempt by doing the things that have been identified as still being outstanding.

h. If I determine they have failed to purge their contempt within the time that the court affords them following the period (or periods) of their incarceration, the plaintiffs may move for default judgment and/or for a further sanction of incarceration. That motion should be booked before me if my schedule permits.

i. I direct that a Form 60L Warrant of Committal issue against each of Hyman and Anastasio in which the last paragraph shall read:

YOU ARE ORDERED TO ARREST Giuseppe Anastasio and Michael Hyman, and deliver them to a provincial correctional institution, to be detained there for thirty days.

j. Section 6(1) of the Prisons and Reformatories Act, RSC 1985, c P-20 as incorporated into s. 28 of the Ministry of Correctional Services Act, R.S.O. 1990, c M.22 shall apply. That is, there shall be no remission on the sentence unless or until ordered by the court upon Mr. Hyman and/or Mr. Anastasio purging their contempt satisfactorily or the full sentence being served.

k. A copy of this decision shall be attached to the Warrant of Committal.

Costs

[110] The Court of Appeal overturned the costs award made under the Sentencing Decision. The plaintiffs seek the substantial indemnity costs of both the first sentencing hearing and this re-sentencing hearing. The costs awarded to the plaintiffs in the first Sentencing Decision included $48,816.31 for the sanction hearing and $109,142.80 for the action.

[111] There was some suggestion of the prospect of further written submissions on costs, but I do not consider that to be necessary. The court expects the parties to have their costs outlines and be prepared to address the issue of costs when a motion is argued.

[112] There was no suggestion of any settlement offers that might need to be considered, which does not surprise me given the nature of this motion. I am going to provide my decision on costs based on the costs outlines that have been provided. If there is something that is critical to the determination of costs that has not been drawn to the court’s attention and thus not considered, the parties may arrange a 9:30 a.m. appointment before any order arising out of this decision is finalized.

[113] In their factum, the plaintiffs sought their substantial indemnity costs of the re-sentencing hearing and the first sentencing hearing. In the Cost Endorsement of Koehnen J. dated May 27, 2020, it was affirmed that "there is a rebuttable presumption that substantial indemnity costs are appropriate in a contempt of court case. The presumption may be rebutted where the contemnor is suitably contrite, has attempted to purge his or her contempt, has taken steps to minimize costs incurred by the other party, and the contempt itself is towards the lower end of the ‘flagrant and wilful" scale’": Astley, 2013 ONSC 6734, 118 O.R. (3d) 43, at para. 57, aff'd 2014 ONCA 668. These factors that might mitigate against substantial indemnity costs are not present in this case.

[114] I find that the plaintiffs are entitled to their substantial indemnity costs of this re-sentencing hearing.

[115] The plaintiffs’ costs outline indicates substantial indemnity costs for the re-sentencing hearing of $57,900. Full indemnity costs are indicated to be $79,240.05

[116] For the short period of time that Hyman’s new counsel has been on record, his full indemnity fees are indicated to be $31,958.20, plus applicable taxes, as stated in the costs outline filed after the re-sentencing hearing (pursuant to the court’s direction). Anastasio’s lawyer’s costs outline indicates full indemnity fees of $44,755.63, inclusive of taxes and disbursements.

[117] This is a sanction hearing for contempt. The plaintiffs were more successful than the Developer Defendants, even if they did not succeed in reinstating the $9 million judgment at this time. That still remains a possibility and the sanctions ordered are not only more onerous than what the Developer Defendants were contending for, but reflect a fundamental and continuing failure by the Developer Defendants to fully purge their contempt.

[118] The quantum of substantial indemnity costs claimed by the plaintiffs is not out of proportion to the importance of the issues. It also falls within what ought to have been objectively and reasonably anticipated by the Developer Defendants that they would be ordered to pay if they lost this motion, given the amount of costs awarded at the first sentencing hearing and given their own costs outlines, which are each lower, but are higher on a combined basis. The amount of substantial indemnity costs sought by the plaintiffs is in the range of what I consider to be fair and reasonable in the circumstances.

[119] In the exercise of my discretion under s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43, and having regard to the principles under r. 57.01, I am fixing the plaintiffs’ substantial indemnity costs of this re-sentencing hearing at $50,000 and ordering the Developer Defendants to pay those costs forthwith on a joint and several basis.

[120] In the costs endorsement dated November 24, 2021 (Thrive Capital Management Ltd. V. Noble 1324, 2021 ONCA 846) the court of appeal permitted the payment of costs awarded for the Contempt Motion against Developer Defendants ($36,011.97) out of the funds posted for security for costs of the appeal. To the extent that fund has not otherwise been depleted and is not earmarked for something else, the costs awarded herein may also be paid out of any such remaining funds posted as security, with the remaining balance to be paid by Hyman and Anastasio.

[121] The Court of Appeal ordered no costs to either party for the appeal. There shall also be no costs to either party for the first sanction hearing, that the court of appeal overturned.

[122] As far as I am aware, nothing in particular has happened in the action itself while this contempt sanction hearing has been pending. The costs of the action awarded by Koehnen J. were only set aside because the judgment was set aside. If the judgment is reinstated by virtue of the default proceedings process, then the plaintiffs may seek to recover their costs of the action, including the costs previously ordered payable by Koehnen J. of $109,142.80 for the action, if and when they move for default judgment.

[123] This decision and the orders and directions contained in it shall have immediate effect as an order of this court without the necessity of the formal issuance and entry of an order, although any party may take out a formal order if so advised by following the procedure under Rule 59 of the Rules of Civil Procedure.

KIMMEL J.

Released: July 12, 2022

COURT FILE NO.: CV-20-00639748-00CL

DATE: 20220712

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 CON-STRADA CONSTRUCTION GROUP INC.

Defendants

Brian N. Radnoff, Dylan E. Augruso, and Dan A. Poliwoda, for the plaintiffs

Justin Necpal, for the Defendant Giuseppe Anastasio

Lorne Sabsay, for the Defendants Michael Hyman and Hampshire and Associates Incorporated

HEARD: May 3, 2022 and July 12, 2022

ADDENDUM TO JULY 12, 2022 REASONS FOR DECISION - CONTEMPT SENTENCING

1. Upon the reading of my oral reasons for decision and the distribution of my written reasons for decision in this matter, further submissions were made by counsel for the defendants Michael Hyman and Giuseppe Anastasio regarding their ability to purge their contempt in the time that had been afforded to them in my decision, following their release from jail. A request was made for their sentences to be served intermittently, on weekends, to enable their compliance by the court’s specified deadline of September 7, 2022.

2. Plaintiffs’ counsel argued that the time following the period of incarceration, coupled with steps that could be taken while they were incarcerated, should be sufficient and that this further accommodation should not be afforded to them.

3. After hearing and considering the submissions of all counsel present, and having regard to what still remains the primary objective of my sanction order, which is for compliance with the Mareva and Disclosure Order and follow-on orders, I amended the Warrants of Committal signed today to allow for the 30 day sentences imposed upon Michael Hyman and Giuseppe Anastasio to be served intermittently, on weekends.

4. This will afford an additional almost two weeks of time for the Developer Defendants to address the noted deficiencies in their compliance and that time will be predominantly during business days which should further enhance their productivity. I agree with the submission of counsel for Mr. Hyman that during the periods of incarceration, the ability of Mr. Hyman and Mr. Anastasio to fulfill their obligations will be substantially impaired. This has been taken into consideration in my decision to accede this request for an intermittent sentence.

5. I indicated orally in court, and reiterate, that the quid pro quo for this accommodation is that the court will not look favourably upon any request by the Developer Defendants in September, 2022 for additional time to purge their contempt. They are expected to make diligent efforts between now and the September 7, 2022 deadline indicated in my Reasons for Decision and to provide evidence of those efforts if they are not able to fulfill their obligations by that deadline. This is of particular importance to Mr. Anastasio who may be retaining new counsel in the interim.

KIMMEL J.

July 12, 2022

COURT FILE NO.: CV-20-00639748-00CL

DATE: 20220712

ONTARIO

SUPERIOR COURT OF JUSTICE

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 CON-STRADA CONSTRUCTION GROUP INC.

REASONS FOR decision

KIMMEL J.

Released: July 12, 2022

[^1]: This includes all of the defendants except Lisa Anastasio, Rajeree Etwaroo, and Con-Strada Construction Group Inc. Although the defendant David Bowen was included among the defendants found to be in contempt, no penalty was sought against him at the first sanction hearing. To avoid confusion, he has not been included in the definition of the “Developer Defendants” to whom the current decision applies. [^2]: The Court of Appeal did not overturn the award of costs in favour of the plaintiffs for the motions leading to the original finding of contempt but did overturn the costs awarded for the original sanction hearing and the action which the plaintiffs would like reinstated. [^3]: The plaintiffs say that Hyman first testified that title had to be taken in the name of another company because financing could not be obtained by a numbered company and then later testified that it was because financing could not be obtained without a guarantee from Mr. Singh, even though neither he nor the plaintiffs had ever agreed to provide a guarantee. [^4]: The plaintiffs also contend that Koehnen J. has already found a strong case on this core allegation (failing to put title to the Brampton Property in the name of 9010 and grant the agreed upon security) in favour of the plaintiffs in his reasons rendered on July 20, 2020 on the motion relating to the sale of the Brampton Property (at paras. 5-17 and paras. 24, 27, 29, 35, and 36. Also paras. 64-70). Similar arguments are made by the plaintiffs arising from the findings of Koehnen J. in his April 23, 2020 reasons that the plaintiffs have raised a serious issue to be tried. The plaintiffs suggest that this is a finding that their claims have merits. These previous findings regarding the merits of the plaintiffs’ claims may assist in the establishment of the plaintiffs’ entitlement to judgment, but they do not address the totality of the merits that the Court of Appeal has indicated must also be considered if judgment is to be granted as a sanction for contempt. [^5]: There is an evidentiary dispute about whether this professional was, as Hyman represented, a CPA, but that designation is not material to this decision. [^6]: Although the plaintiffs have indicated that they believe that the record before the court at that time and at this re-sentencing hearing contains sufficient proof of their damages to enable the court to grant judgment for the full amount claimed (as was granted in the Sentencing Decision), they have allowed for the possibility that the court may require them to tender further proof of their damages and propose to establish them in a further hearing. They themselves suggested that there be a further hearing to determine the appropriate amount of any judgment to be granted to them as the sanction for their contempt. As a practical matter, if they move for default judgment they will have the opportunity to prove their entitlement to damages at that time.