Court File and Parties

COURT FILE NO.: CV-23-00692633-0000 DATE: 2024 1003 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Ingrid Gonzalez and Luis Valdivia, Plaintiffs AND: Gurmeet Singh and Gurdev Singh Narula a.k.a. Gurdev Raj Narula a.k.a. Dave Narula, Defendants

BEFORE: Chalmers J.

COUNSEL: Guillermo Schible, for the Plaintiffs Pathik Baxi, for the Non-Party, Walia Surenda

HEARD: October 2, 2024, in person

Reasons for Sentence

Overview

[1] The plaintiffs brought a motion for a declaration that the defendant Gurmeet Singh is in contempt of court, for failing to comply with court orders. By endorsement dated August 9, 2024, I found Mr. Singh to be in contempt of court.

[2] The penalty phase of the contempt hearing was scheduled for September 9, 2024. The hearing was adjourned to October 2, 2024. Mr. Singh failed to attend the penalty phase hearing. He did not file any material. The penalty phase proceeded in Mr. Singh’s absence.

[3] For the reasons set out below, I order that Mr. Singh’s defence is struck. I also sentence Mr. Singh to seven days incarceration in a provincial reformatory.

Analysis

Penalty Phase of the Contempt Hearing

[4] The enforcement of court orders is fundamental to the rule of law. As noted by Justice Cumming in Sussex Group Ltd. v. 3933938 Canada Inc., (Sussex Group), at para. 47:

It is integral to a free and democratic society like Canada that citizens act pursuant to and under the rule of law. Court orders in force must be respected and followed. The deliberate failure to obey a court order strikes at the very heart of the administration of justice.

[5] Rule 60.11(5) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 sets out the range of penalties that may be imposed following a finding of contempt:

60.11(5) In disposing of a motion under subrule (1), the judge may make such order as is just, and where a finding of contempt is made, the judge may order that the person in contempt,

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. R.R.O. 1990, Reg. 194, r. 60.11.

[6] Rule 60.12(b) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 provides that where a party fails to comply with an interlocutory order, the court may strike out the party’s defence.

[7] The objectives of a civil contempt order are to enforce performance of court orders, and/or to punish the wrongdoer to achieve both specific and general deterrence. The factors relevant to the determination of the appropriate sentence for civil contempt include:

a) The proportionality of the sentence to the wrongdoing; b) The presence of mitigating factors; c) The presence of aggravating factors; d) Deterrence and denunciation; e) The similarity of sentences in like circumstances; and f) The reasonableness of a fine or incarceration: Mercedes-Benz Financial (DCFS Canada Corp.) v. Kovacevic at para. 10.

Consideration of the Factors

[8] I found that Mr. Singh was in contempt of court for failing to comply with paragraphs 5 and 6 of the order of Justice Akbarali dated March 4, 2024. He was ordered to provide a sworn statement describing the nature, value and location of his worldwide assets. Although Mr. Singh provided a sworn statement on May 2, 2024, I found that the statement was not responsive to Justice Akbarali’s order. He also failed to provide the financial disclosure and all information upon which he relies in support of his position that the various mortgages are bona fide.

[9] Attempts to contact Ms. Singh after May 2, 2024 were unsuccessful. He failed to attend court for the liability phase of the contempt hearing on August 6, 2024. He also failed to attend the penalty phase of the contempt hearing. His present whereabouts are unknown.

[10] I find that Mr. Singh has no intention of purging his contempt. His non-compliance and his failure to attend court proceedings when required to do so is deliberate and intentional. He has not provided any explanation for his default. There are no mitigating factors.

Striking the Defence

[11] The plaintiffs argue that in the circumstances of this case, the appropriate sentence for contempt is an order striking out Mr. Singh’s defence. Rule 60.12(b) provides that striking a defence is a remedy if there is a breach of an interlocutory order. There is no doubt that a penalty for civil contempt may include striking a Statement of Defence: Thrive Capital Management Ltd. v. Noble 1324 Queen Inc., 2021 ONCA 722, at para. 22.

[12] In determining whether to strike a parties’ pleading, the court should ensure that the party had a reasonable opportunity to cure its non-compliance. Other factors include, (i) whether the party’s failure is deliberate or inadvertent, (ii) whether the failure is clear and unequivocal, (iii) whether the defaulting party can provide a reasonable explanation for its default, with a credible commitment to cure the default quickly, (iv) whether the substance of the default is material or minimal; (v) the extent to which the party remains in default at the time the request to strike the defence is made, and (vi) the impact of the default on the ability of the court to do justice: Falcon Lumber Limited v. 2480375 Ontario Inc. (GN Mouldings and Doors), 2020 ONCA 310, at paras. 50-51.

[13] Here, all factors favour striking Mr. Singh’s defence. He has had a reasonable opportunity to cure the contempt. I found that he deliberately failed to comply with the court orders. He did not provide any explanation for his failure to comply. He remains in default.

[14] I am satisfied that the appropriate penalty for the contempt of court is the striking of Mr. Singh’s Statement of Defence. However, I am not prepared to grant default judgment at this time. The motion for default judgment will proceed in writing.

Custodial Sentence

[15] A custodial sentence is a sanction of last resort. It is reserved for the most serious contempt or where there is no choice but to jail a contemnor in order to coerce compliance or express deterrence and denunciation: Thrive Capital, at para. 57. In determining whether a custodial sentence is appropriate, the court will consider the following factors: (i) has the contempt continued over a period of many months, (ii) has the contemnor shown remorse and (iii) does the contempt threaten other assets: Sussex Group.

[16] The primary purpose of sentencing in civil contempt is to coerce the contemnor to comply with orders. However, if the methods to coerce compliance are unsuccessful, the focus of the penalty goes beyond compliance and is at the deterrence and denunciation stage: Business Development Bank of Canada v. Cavalon Inc., 2017 ONCA 663, at paras. 77-81. As stated in Thrive Capital:

[55] While the court’s 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 case.

[16] The range of sentence can “vary greatly with the facts of the case”: Greenberg v. Nowack, 2020 ONCA 2370, at para. 43. The sentence should be similar to sentences imposed on similar contemnors for similar contempts committed in similar circumstances: Criminal Code, s. 718.2(b).

[17] In my view the following cases are the closest on the facts for the ongoing failure to comply with production orders:

• In Mercedes-Benz - The court imposed a custodial sentence of five days, although the contempt was fully purged before the sentencing;
• 2363523 Ontario Inc. v. Nowack, 2016 ONCA 951 – The defendant failed to produce documents and to account for the funds he invested for the plaintiffs. He was imprisoned for 30 days;
• Mohammad v. Anwar, 2018 ONSC 2437 – The defendant failed to comply with a production order. If the defendant delivered a sworn statement in compliance with the order he would be imprisoned for 10 days. If he did not provide a sworn statement confirming compliance, he would be imprisoned for 60 days;
• Borer v. Nelson, 2020 ONSC 4259 – the defendant failed to comply with the Mareva order and three further disclosure and production orders. The non-compliance took place over a four-month period. The defendant was imprisoned for a period of 14 days;
• Wilson v. Semon, 2013 ONSC 6785, the court imposed a sentence of 30 days incarceration for failing to produce documentation and for dissipating assets.

[18] I find that Mr. Singh deliberately and wilfully disobeyed the order of Justice Akbarali and my production orders. He failed to purge the contempt. He failed to provide any material on the contempt motion to explain his failure to purge the contempt. He failed to attend court when required to do so. There is no reason to expect that were I to impose a fine that Mr. Singh would pay it.

[19] In my view a custodial sentence is required to impress upon Mr. Singh the importance of complying with orders of the court. The custodial sentence should be at the lower end of the spectrum. The principal punishment for failing to abide by the court's orders is the striking Mr. Singh's pleadings: 180 University Management Inc., et al. v. Khan, et al., 2023 ONSC 1621, at para. 25.

[20] I sentence Mr. Singh to serve seven days in a provincial reformatory. I consider this to be the minimum sentence that will serve the sentencing objectives of denunciation and deterrence. I direct that a Warrant of Committal shall issue against Mr. Singh.

Costs of the Contempt Hearing

[21] The plaintiffs seek their costs of the contempt hearing on a substantial indemnity basis, in the amount of $15,000.00, inclusive of counsel fee, disbursements, and H.S.T.

[22] There is a rebuttable presumption that substantial indemnity costs will be awarded in contempt cases. To not award something approaching complete indemnity to the successful party would “involve some cost or punishment to the successful party arising solely out of the conduct of the other party in violating the court order”: 1307347 Ontario Inc. v. 1243058 Ontario Inc. (c.o.b. Golden Seafood Restaurant), [2001] O.J. No. 257 at para. 5.

[23] The presumption of substantial indemnity costs, may be rebutted where the contemnor is contrite, has attempted to purge the contempt, has taken steps to minimize the costs incurred by the other party and the contempt is at the lower end of the “flagrant and willful” scale: Astley v. Verdun, 2013 ONSC 6734, at para. 57. Here, Mr. Singh has not rebutted the presumption of substantial indemnity costs. He failed to attend court when required to do so. He did not file any material on the contempt hearing.

[24] I am satisfied that the plaintiffs are entitled to their costs of the contempt motion on a substantial indemnity basis. In fixing costs on a substantial indemnity basis, I am required to balance the factors set out in R. 57.1(1) and arrive at an amount that is reasonable and fair and bears some relationship to the amount that an unsuccessful party could reasonably expect to pay. Akagi v. Synergy Group (2000) Inc., 2015 ONCA 771, at para. 55.

[25] I fix the costs of the contempt motion in the amount of $15,000 inclusive of counsel fee, disbursements and H.S.T. I am satisfied that a cost award in this amount is fair and within the reasonable expectation of Mr. Singh to pay. The costs are payable by Mr. Singh within 30 days of the date of this endorsement.

Disposition

[26] For the reasons set out above, I make the following order:

a. I strike Mr. Singh’s statement of defence. The motion for default judgment will proceed in writing. The plaintiffs are required to deliver their motion for default judgment within 30 days of the date of this endorsement; b. I sentence Mr. Singh to a period of incarceration of seven days. I signed a warrant of committal which is attached to this endorsement; and, c. I award costs of the contempt hearings on a substantial indemnity basis to the plaintiffs, fixed in the amount of $15,000 inclusive of counsel fee, disbursements and H.S.T. The costs are payable by Mr. Singh within 30 days of the date of this endorsement.

Chalmers J. Date: October 3, 2024