Court File and Parties
COURT FILE NO.: CV-23-694377-0000 DATE: 20240403 ONTARIO SUPERIOR COURT OF JUSTICE
APPLICATION UNDER Rule 14.05 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194
BETWEEN:
Ontario Public Service Employees Union/Syndicat des Employes de la Fonction Publique de l’Ontario Applicant/Moving Party – and – Mark Mendl and Mark Mendl Law Professional Corporation Respondents
Counsel: Kristian Borg-Olivier and Janet-Lee Song, for the Applicant/Moving Party No one appearing for the Respondents
HEARD: March 28, 2024
J. Callaghan J.
REASONS FOR DECISION
[1] This is a motion seeking a contempt order as against Mark Mendl (“Mendl”), a lawyer and a member of the Ontario bar, who practices through Mark Mendl Law Professional Corporation. The motion is brought by his former client, Ontario Public Service Employees Union/Syndicat Des Employes De La Fonction Publique De L'Ontario (“OPSEU” or “Union”).
[2] For the reasons that follow, a contempt order is granted. Mendl has refused to comply with the order of Justice Chalmers dated August 29, 2023. This contempt order will require Mendl to attend in person with respect to penalty. It is hoped he will have purged his contempt by that time.
Facts
[3] In 2022, after a change in leadership at OPSEU, the new board at OPSEU discovered suspicious payments made by the Union (while under the control of its previous administration) to Mendl’s trust account. Mendl had been the Union’s external counsel. When asked by the Union to provide documents regarding the payments, Mendl refused to comply, resulting in the termination of his retainer.
[4] The new administration at the Union then undertook a forensic audit, which revealed significant non-retainer payments made by the Union to Mendl’s trust account—totalling $3.7 million. The Union could find no documentation in its files explaining why these payments were made. The unexplained trust payments are as follows (collectively, the “Trust Payments”):
| Date | Amount Paid to Mendl’s Trust Account |
|---|---|
| December 8, 2021 | $450,000 |
| January 11, 2022 | $450,000 |
| March 9, 2022 | $500,000 |
| April 1, 2022 | $2,300,000 |
[5] Several written requests by the Union were made for the relevant documentation, including the Union’s client file and financial documentation relevant to the Trust Payments. While assurances were provided by Mendl that such documentation would be forthcoming, none was provided. On February 8, 2023, the Union commenced an application to compel Mendl to deliver its client file and financial records, including those relating to the Trust Payments.
[6] On cross-examination, upon being questioned about the payments, Mendl testified that he was aware of the details as to who and why the payments were made but, for reasons unstated, he refused to provide the details or backup documentation to his former client, the Union. For example, when asked about $2,300,000 in payments, he acknowledged he not only knew the reasons for the payments but had both electronic and hard copy documentation regarding the payments which he would not produce to the Union. Moreover, he acknowledged that the Union is entitled to the information.
[7] Justice Chalmers heard the application on August 24, 2023. Mendl did not attend the hearing nor file materials with the court. Justice Chalmers granted the relief with an endorsement to follow. The Union’s counsel sent an email to Mendl advising that the motion was successful, attaching the draft order and a bill of costs. The draft order was in the form subsequently issued.
[8] On August 29, 2023, Justice Chalmers issued his endorsement (the “August 29 Endorsement”) which sets out the reasons for his order requiring Mendl to produce his client file and the relevant financial documents relating to the Trust Payments. In his reasons, Justice Chalmers expressed concern over both the actions of Mendl and his refusal to attend the hearing. Justice Chalmers wrote as follows:
I find Mr. Mendl’s conduct to be most concerning. On several occasions he stated that the files would be returned but he failed to do so. He even went so far as to state that the files had already been sent when that was not in fact true. He failed to file any materials. He did not advise counsel for the Union or the Court that he would not be attending the hearing. His conduct has been disrespectful to both counsel and the court.
[9] The endorsement clearly set out that Mendl had 15 days from the date of the August 29 Endorsement to produce the ordered documents.
[10] Counsel for the Union forwarded the August 29 Endorsement to Mendl on August 29, 2023. On September 13, 2023, while awaiting the issued order, Mendl wrote counsel for the Union stating:
Please advise your client that we are appealing both the merits and the cost award. You'll have our notice of appeal shortly.
[11] An order dated on August 29, 2023, being the operative date as per the August 29 Endorsement, was issued on September 15, 2023 as follows (the “August 29 Order”):
THIS COURT ORDERS that the application is granted.
THIS COURT ORDERS that Mendl and Mendl PC deliver to OPSEU/SEFPO its entire client file within fifteen (15) calendar days from the date of this Order.
THIS COURT ORDERS that Mendl and Mendl PC deliver to OPSEU/SEFPO a copy of its financial records, including its trust ledger, its general account statements, and the account statements for Mendl PC, and all records, including correspondence, directions and agreements, relating to payments Mendl and/or Mendl PC received from or on behalf of OPSEU/SEFPO, including but not limited to the following payments that were made by OPSEU/SEFPO to Mendl or Mendl PC's trust account, within fifteen (15) calendar days from the date of this Order:
Date Amount Paid to Mendl’s Trust Account December 8, 2021 $450,000 January 11, 2022 $450,000 March 9, 2022 $500,000 April 1, 2022 $2,300,000 THIS COURT ORDERS that Mendl and Mendl PC shall pay to OPSEU/SEFPO the costs of this application in the all-inclusive amount of $60,000.
[12] No appeal was ever filed.
[13] The 15 days for compliance and production as ordered by Justice Chalmers passed without Mendl providing the ordered client file and financial records.
[14] As Mendl was not responsive to the order, the Union booked a CPC attendance to get another court date to address this matter. Mendl attended the CPC hearing before Justice Chalmers. A case conference was ordered before Justice Stinson.
[15] At the case conference, Justice Stinson directed Mendl, and Mendl agreed, to deliver to the Union the Union’s client file in electronic form later that day and his trust account records for the Union by December 6, 2023, at 12:00 PM EST. Mendl delivered 3,903 documents to Union counsel in electronic format. After a comprehensive review, it was determined by the Union that only a small handful of documents that the Union received were potentially relevant to two of the Trust Payments, being the two $450,000 payments. There was a notable absence of documentation relating to the remaining Trust Payments. Mendl has provided no explanation to this court to refute this assertion or explain the lack of documentation for the remaining $2,800,000.
[16] On December 8, 2023, the parties attended a further case conference before Justice Stinson. Mendl requested an adjournment to retain counsel. Justice Stinson scheduled a further case conference for December 18, 2023. In his endorsement on December 8, 2023, Justice Stinson urged Mendl to comply with the August 29 Order to avoid the need for further court proceedings and potential sanctions.
[17] On the return date of December 18, 2023, Mendl had not retained counsel as he had suggested he would on December 8, 2023. Justice Stinson set this date and also a date for a Norwich application as the Union now sought to obtain the financial disclosure denied to it by Mendl from the financial institutions that dealt with the money. Justice Stinson commented on the state of compliance as follows:
For his part, Mr. Mendl advised that he has not yet managed to retain counsel, despite his attempts to do so. I pointed out to him that he has had considerable time to respond to the requests of OPSEU (dating back to December 2022) and the order of Justice Chalmers (dated August 29, 2023). He has been granted repeated indulgences. It is now time to fix a timetable for the hearings that the applicant has been seeking for some time.
[18] Justice Stinson then ordered a timetable for this matter. Justice Stinson ordered that all material may be served by email. Mendl has not complied with the timetable. He has not filed responding material, sought to cross-examine, or file a factum as set out in the endorsement. Inquiries by Union’s counsel have not been responded to by Mendl.
[19] In an attempt to learn more about these financial transactions, the Union sought a Norwich Order to compel Mendl’s bank to advise what it knows of these transactions. A Norwich order was issued on January 15, 2024. In issuing the Norwich order, Justice Koehnen stated:
An application of this sort should never have had to have been brought. OPSEU has an absolute right to the information that it seeks. Mendl has refused to give his former client information to which it is entitled. Mendl has similarly refused to follow two court orders that, in effect, required him to provide the information now sought. OPSEU had no other choice in those circumstances but to bring the application it did.
[20] To date, no further information has been provided by Mendl and the cost order of $60,000 has yet to be paid. This contempt addresses the failure to produce the client file and financial records.
[21] Mendl did not attend at this hearing, although served by email in accordance with Justice Stinson’s December 18, 2023, endorsement. He not only has notice of this hearing as a result of being served the material, but he was present when Justice Stinson set this schedule. He has not taken the steps provided for in the timetable and has not communicated with Union’s counsel. I find Mendl not only has notice of today’s hearing but has made the deliberate choice to ignore this court’s process. In the circumstances, I find it appropriate and in the interest of justice, at this first stage of the contempt proceeding, to proceed today. As such, I decline to use the powers under 60.11(4) to compel his attendance by warrant for arrest.
Discussion
[22] This is a motion for civil contempt. The test for civil contempt was set out in 2363523 Ontario Inc. v. Nowack, 2016 ONCA 951, at para 20:
[20] A party seeking to establish civil contempt must prove that: (a) the order alleged to have been breached states clearly and unequivocally what should and should not have been done; (b) the party alleged to have breached the order had actual knowledge of it; and (c) the party allegedly in breach intentionally did the act the order prohibits or intentionally failed to do the act the order compels: Carey v. Laiken, 2015 SCC 17, [2015] 2 S.C.R. 79, at paras. 33-35. A judge retains an overriding discretion to decline to make a contempt finding where the foregoing factors are met where it would be unjust to do so, such as where the alleged contemnor has acted in good faith to take reasonable steps to comply with the relevant court order: Carey v. Laiken, at para. 37. The burden on a party seeking a contempt order is to establish the above elements by proof beyond a reasonable doubt: Carey v. Laiken, at para. 32; Bell ExpressVu Limited Partnership v. Torroni, 2009 ONCA 85, 94 O.R. (3d) 614, at para. 29; Chiang (Re), 2009 ONCA 3, 93 O.R. (3d) 483, at paras. 11 and 50.
[23] I am satisfied, beyond a reasonable doubt, in this case that:
a) The order of Justice Chalmers is clear. The Union’s client file was to be produced. All documents and financial records relating to the Trust Payments were to be produced. Mendl has expressed no doubt as to what he is required to produce. The August 29 Order relates to very specific payments, the Trust Payments, which are known to Mendl. He has acknowledged that he has both the Union file and the documents being sought by the Union regarding the Trust Payments. He indicated to Justice Stinson he would produce the file and financial records. He has never expressed any misapprehension as to what he is required to produce. b) Mendl has actual notice of the August 29 Endorsement which ordered he had 15 days from August 29, 2023, to produce the client file and financial documents. Indeed, he indicated he was going to appeal which he did not do. He advised Justice Stinson that he would comply with the August 29 Order which he has yet to do. He has actual notice of that order and, moreover, he is aware that he is in breach of the August 29 Order. c) Mendl has deliberately not complied with the August 29 Order. Upon examination, Mendl concedes he has both the Union file and the documents relevant to the Trust Payments. The uncontradicted evidence of the Union, which I accept, is that not all the client file has been produced, all the documents relating to the two $450,000 payments have not been produced and none of the documents relating to the $500,000 and $2,300,000 have been produced. I am satisfied that Mendl deliberately continues to refuse production of the ordered documents.
[24] I am satisfied that the test for contempt has been established beyond a reasonable doubt. I see no reason to exercise my discretion to decline the contempt order. Mendl is a lawyer and an officer of the court. As such, his refusal to abide by the court order is most troubling. He is expected to uphold the rule of law and his actions on this occasion are quite to the opposite. There is no good reason for me to exercise my discretion in the circumstances and I decline to do so.
[25] I was asked to issue an order allowing Mendl to purge his contempt and, if he does not do so, to automatically commit him to serve an initial period of imprisonment of 90 days. The purpose of civil contempt is to ensure compliance with the court’s orders and to ensure societal respect for the courts: see Boily v. Carleton Condominium Corp. 145, 2014 ONCA 574, 121 O.R. (3d) 670, at para. 79. The ordinary procedure is to permit the person found in contempt a last opportunity to purge the contempt before addressing the penalty phase: see Business Development Bank of Canada v. Cavalon Inc., 2017 ONCA 663.
[26] In my view, the appropriate procedure is to provide Mendl a period to purge his contempt and, requiring this matter to return to the court thereafter to consider penalty and such other appropriate orders. Any penalty will then be able to take into consideration whether Mendl purged his contempt.
[27] The penalty hearing will be heard on April 18, 2024. This should be sufficient time for Mendl to purge his contempt if he chooses to do so. The Union is to personally serve this decision and resulting order on Mendl. For the penalty phase, I order that Mendl attend in person on April 18, 2024. I encourage Mendl to purge his contempt before April 18, 2024, and the Union to advance such remedies that would result in compliance with the August 29 Order.
Disposition
[28] Accordingly, I make the following orders:
- Mendl is in contempt of the August 29 Order;
- this matter is to return before me on April 18, 2024 to address penalty;
- the Union is to personally serve Mendl with this decision and resulting order; and;
- Mendl is to appear in person on April 18, 2024.
Callaghan J. Released: April 3, 2024