Sabourin and Sun Group of Companies v. Laiken, (2015) 332 O.A.C. 142 (SCC)

• Judge: McLachlin, C.J.C., Abella, Rothstein, Cromwell, Moldaver, Karakatsanis and Wagner, JJ.
• Court: Supreme Court (Canada)
• Case Date: December 10, 2014
• Jurisdiction: Canada (Federal)
• Citations: (2015), 332 O.A.C. 142 (SCC);2015 SCC 17;332 OAC 142;382 DLR (4th) 577;66 CPC (7th) 1;[2015] ACS no 17;470 NR 89;[2015] 2 SCR 79;JE 2015-660;[2015] CarswellOnt 5237;[2015] SCJ No 17 (QL);251 ACWS (3d) 242

Sabourin & Sun Group v. Laiken (2015), 332 O.A.C. 142 (SCC)

MLB headnote and full text

[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

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Temp. Cite: [2015] O.A.C. TBEd. AP.034

Peter W.G. Carey (appellant) v. Judith Laiken (respondent)

(35597; 2015 SCC 17; 2015 CSC 17)

Indexed As: Sabourin and Sun Group of Companies v. Laiken

Supreme Court of Canada

McLachlin, C.J.C., Abella, Rothstein, Cromwell, Moldaver, Karakatsanis and Wagner, JJ.

April 16, 2015.

Summary:

Sabourin and Laiken were involved in protracted litigation. Laiken obtained a Mareva injunction against Sabourin, freezing Sabourin's assets on strict terms. Sabourin gave his lawyer (Carey) a $500,000 cheque. Carey deposited the cheque in his trust account. He subsequently deducted $60,000 for his outstanding fees and returned the balance to Sabourin. Laiken sued Carey alleging, inter alia, negligence in relation to his return of the $440,000 to Sabourin in breach of the Mareva injunction. Laiken moved to have Carey found in contempt of the Mareva injunction. Carey moved for summary judgment dismissing Laiken's action. Carey did not attend the hearing but was represented by counsel.

The Ontario Superior Court, in a decision reported at [2011] O.T.C. Uned. 5892, found Carey in contempt and adjourned the matter. The court dismissed Carey's motion. Carey moved to stay the order pending an appeal.

The Ontario Court of Appeal, per Sharpe, J.A., in a decision reported at 286 O.A.C. 273, dismissed the motion as premature. When the contempt hearing resumed, Carey testified to amplify his defence to the contempt allegation.

The Ontario Superior Court set aside the finding of contempt, holding that Carey had not deliberately breached the Mareva injunction and his interpretation of it was not wilfully blind. Laiken appealed.

The Ontario Court of Appeal, in a decision reported at 310 O.A.C. 209, allowed the appeal and restored the finding of contempt. However, as Carey's actions were prompted by an error of judgment and did not amount to a deliberate violation of the Mareva injunction, the court limited the sanction to the payment of costs on a partial indemnity basis. Carey obtained leave to appeal and appealed.

The Supreme Court of Canada dismissed the appeal.

Barristers and Solicitors - Topic 673

Duty to court - Contempt - What constitutes contempt - The Ontario Court of Appeal found that a lawyer (Carey) had violated both the letter and the spirit of a court order and his lack of contumacious intent did not prevent the court from holding him in contempt - Carey appealed, asserting that where the alleged contemnor could not purge his contempt, was a lawyer or was a third party to an order, proof of an intention to interfere with the administration of justice (contumacy) was required - The Supreme Court of Canada rejected the assertion - Contumacy was not an element of civil contempt and therefore lack of contumacy was not a defence - See paragraphs 26 to 47.

Barristers and Solicitors - Topic 673

Duty to court - Contempt - What constitutes contempt - Laiken obtained a Mareva injunction against Sabourin - Sabourin gave his lawyer (Carey) a $500,000 cheque - Carey deposited the cheque in his trust account - He subsequently deducted his outstanding fees and returned the balance to Sabourin - Laiken moved to have Carey found in contempt of the Mareva injunction - The motions judge dismissed the motion, holding that Carey had not deliberately breached the injunction and his interpretation of it was not wilfully blind - The Ontario Court of Appeal allowed an appeal and found Carey in contempt - Carey appealed, asserting that the payment of funds from his trust account to Sabourin was not a "transfer" within the meaning of the injunction, either because beneficial ownership of the funds did not change or because it amounted to a permissible return of an overpayment of legal fees that informal variations to the order permitted - The Supreme Court of Canada dismissed the appeal - The injunction's purpose was to prevent dealings with Sabourin's assets that would defeat the court's process - Carey's position, if accepted, would mean that the order permitted the trustees of assets held for Sabourin's benefit to freely transfer those assets between accounts and even between jurisdictions, putting those assets beyond the court's reach in event of execution, so long as Sabourin retained beneficial ownership of the assets - Such an interpretation was illogical - Carey's characterization of the $500,000 as an "overpayment" of "reasonable legal fees" was artificial in the extreme - Even if the court accepted that characterization, the clear terms of the injunction still prohibited any transfer of those "excess" funds - While the issue of whether Sabourin's initial transfer of the funds to Carey breached the injunction was not before the court, the court rejected Carey's assertion that if it were a breach, that justified a subsequent violation of the order by returning the money to Sabourin - See paragraphs 50 to 53.

Barristers and Solicitors - Topic 673

Duty to court - Contempt - What constitutes contempt - Laiken obtained a Mareva injunction against Sabourin - Sabourin gave his lawyer (Carey) a $500,000 cheque - Carey deposited the cheque in his trust account - He subsequently deducted his outstanding fees and returned the balance to Sabourin - Laiken moved to have Carey found in contempt of the Mareva injunction - The motions judge dismissed the motion, holding that Carey had not deliberately breached the injunction and his interpretation of it was not wilfully blind - The Ontario Court of Appeal allowed an appeal and found Carey in contempt - Carey appealed, asserting that there was a conflict between the injunction and professional duties such that he had no option but to transfer the funds back to Sabourin - The Supreme Court of Canada rejected the assertion - Assuming that the funds were privileged, Carey's duty to guard solicitor-client privilege did not conflict with his duty to comply with the order - To fulfill both, he only had to leave the funds in his trust account - Carey expressed concern that if he left the funds in his account, he would be assisting in shielding them from execution in the event that Laiken succeeded in her action against him - The position was not only illogical, but ironic given that returning the funds had that effect - If Carey had retained the funds, a conflict might have developed, but it was not an answer for him to say that he breached the injunction so that he would avoid the possibility of a future ethical dilemma - Accepting that he believed, albeit mistakenly, that there was a true conflict, there were avenues open to him other than breaching the injunction - There was no legal or ethical duty that compelled him to breach the injunction or that conflicted with obeying the injunction - See paragraphs 54 to 60.

Contempt - Topic 6

General - General principles - Power of courts - The Supreme Court of Canada stated that "The contempt power is discretionary and courts have consistently discouraged its routine use to obtain compliance with court orders ... If contempt is found too easily, 'a court's outrage might be treated as just so much bluster that might ultimately cheapen the role and authority of the very judicial power it seeks to protect' ... As this Court has affirmed, 'contempt of court cannot be reduced to a mere means of enforcing judgments' ... Rather, it should be used 'cautiously and with great restraint' ... For example, where an alleged contemnor acted in good faith in taking reasonable steps to comply with the order, the judge entertaining a contempt motion generally retains some discretion to decline to make a finding of contempt ... While I prefer not to delineate the full scope of this discretion, given that the issue was not argued before us, I wish to leave open the possibility that a judge may properly exercise his or her discretion to decline to impose a contempt finding where it would work an injustice in the circumstances of the case." - See paragraphs 36 and 37.

Contempt - Topic 10

General - General principles - Scope of contempt power - [See Contempt - Topic 6 ].

Contempt - Topic 42

General - Elements of contempt - Mens rea - The Supreme Court of Canada stated that "Civil contempt has three elements which must be established beyond a reasonable doubt ... These three elements, coupled with the heightened standard of proof, help to ensure that the potential penal consequences of a contempt finding ensue only in appropriate cases ... The first element is that the order alleged to have been breached 'must state clearly and unequivocally what should and should not be done' ... This requirement of clarity ensures that a party will not be found in contempt where an order is unclear ... An order may be found to be unclear if, for example, it is missing an essential detail about where, when or to whom it applies; if it incorporates overly broad language; or if external circumstances have obscured its meaning ... The second element is that the party alleged to have breached the order must have had actual knowledge of it ... It may be possible to infer knowledge in the circumstances, or an alleged contemnor may attract liability on the basis of the wilful blindness doctrine ... Finally, the party allegedly in breach must have intentionally done the act that the order prohibits or intentionally failed to do the act that the order compels ..." - See paragraphs 32 to 36.

Contempt - Topic 43

General - Elements of contempt - Wilfulness - [See first Barristers and Solicitors - Topic 673 and Contempt - Topic 42 ].

Contempt - Topic 45

General - Elements of contempt - Knowledge of court order - [See Contempt - Topic 42 ].

Contempt - Topic 503

What constitutes contempt - General principles - Civil and criminal contempt distinguished - The Supreme Court of Canada stated that "The common law has developed to recognize two forms of contempt of court: criminal contempt and civil contempt. The distinction ... rests on the element of public defiance accompanying criminal contempt ... With civil contempt, where there is no element of public defiance, the matter is generally seen 'primarily as coercive rather than punitive' ... However, one purpose of sentencing for civil contempt is punishment for breaching a court order ... Courts sometimes impose substantial fines to match the gravity of the contempt, to deter the contemnor's continuing conduct and to deter others from comparable conduct ..." - See paragraph 31.

Contempt - Topic 682

What constitutes contempt - Judgments and orders - Requirement of knowledge of court order - [See Contempt - Topic 42 ].

Contempt - Topic 683

What constitutes contempt - Judgments and orders - Requirement of clear and unambiguous order - [See Contempt - Topic 42 ].

Contempt - Topic 684

What constitutes contempt - Judgments and orders - Disobedience of or non-compliance with - [See all Barristers and Solicitors - Topic 673 ].

Contempt - Topic 690

What constitutes contempt - Judgments and orders - Injunctions - Disobedience of - [See second and third Barristers and Solicitors - Topic 673 ].

Contempt - Topic 1161

What constitutes contempt - Counsel - General - [See all Barristers and Solicitors - Topic 673 ].

Contempt - Topic 2649

Defences - Particular defences - Inability to comply with court order - [See first Barristers and Solicitors - Topic 673 ].

Contempt - Topic 2655

Defences - Particular defences - Conflict of interest - [See third Barristers and Solicitors - Topic 673 ].

Contempt - Topic 2656

Defences - Particular defences - Adequate excuse - [See second Barristers and Solicitors - Topic 673 ].

Contempt - Topic 3301

Punishment - General - Considerations - [See Contempt - Topic 503 ].

Contempt - Topic 5009

Practice - General principles - Civil contempt proceedings - Laiken obtained a Mareva injunction against Sabourin - Sabourin gave his lawyer (Carey) a $500,000 cheque - Carey deposited the cheque in his trust account - He subsequently deducted his outstanding fees and returned the balance to Sabourin - Laiken moved to have Carey found in contempt of the Mareva injunction - The motions judge found Carey in contempt of court - When the hearing resumed, Carey testified to amplify his defence to the contempt allegation - The judge set aside the contempt finding, holding that Carey had not deliberately breached the Mareva injunction and his interpretation of it was not wilfully blind - The Ontario Court of Appeal restored the contempt finding, holding that the judge erred in setting aside her initial contempt finding - The Supreme Court of Canada affirmed the decision - In civil contempt proceedings, once a finding of contempt had been made at the first stage of a bifurcated proceeding, that finding was usually final - As the Court of Appeal stated, "[a] party faced with a contempt motion is not entitled to present a partial defence [at the liability stage] and then, if the initial gambit fails, have a second 'bite at the cherry'" at the penalty stage - That would defeat the first hearing's purpose - This was what the motions judge erroneously permitted Carey to do - Without exhaustively outlining the circumstances in which a judge could properly revisit an initial contempt finding, the court agreed with the Court of Appeal that he or she could do so where the contemnor subsequently complied with the order or otherwise purged his or her contempt or, in exceptional circumstances, where new facts or evidence have come to light after the contempt finding was made - Neither rule 60.11 nor the case law permitted the motions judge to revisit her earlier finding in the circumstances of the case - See paragraphs 61 to 67.

Contempt - Topic 5103

Practice - Hearing - Procedure - [See Contempt - Topic 5009 ].

Practice - Topic 5006

Conduct of trial - General principles - Reopening of trial to hear additional submissions or evidence - [See Contempt - Topic 5009 ].

Practice - Topic 5461

Judgments and orders - Finality of judgments and orders - General - [See Contempt - Topic 5009 ].

Cases Noticed:

College of Optometrists (Ont.) v. SHS Optical Ltd. et al. (2008), 241 O.A.C. 225; 2008 ONCA 685, refd to. [para. 18].

United Nurses of Alberta v. Alberta (Attorney General), [1992] 1 S.C.R. 901; 135 N.R. 321; 125 A.R. 241; 14 W.A.C. 241, refd to. [para. 30].

Pro Swing Inc. v. Elta Golf Inc., [2006] 2 S.C.R. 612; 354 N.R. 201; 218 O.A.C. 339; 2006 SCC 52, refd to. [para. 30].

Bell ExpressVu Limited Partnership v. Torroni et al. (2009), 246 O.A.C. 212; 94 O.R.(3d) 614; 2009 ONCA 85, refd to. [para. 30].

Poje v. British Columbia (Attorney General), [1953] 1 S.C.R. 516, refd to. [para. 31].

Mendlowitz & Associates Inc. et al. v. Chiang et al. (2009), 257 O.A.C. 64; 305 D.L.R.(4th) 655; 2009 ONCA 3, refd to. [para. 31].

Chiang v. Chiang - see Mendlowitz & Associates Inc. et al. v. Chiang et al.

Services aux enfants adultes de Prescott-Russell v. N.G. et al. (2006), 214 O.A.C. 146; 82 O.R.(3d) 686 (C.A.), refd to. [para. 32].

Bhatnager v. Canada (Minister of Employment and Immigration), [1990] 2 S.C.R. 217; 111 N.R. 185, refd to. [para. 32].

Jackson v. Honey (2009), 267 B.C.A.C. 210; 450 W.A.C. 210; 2009 BCCA 112, refd to. [para. 32].

TG Industries Ltd. v. Williams et al. (2001), 196 N.S.R.(2d) 35; 613 A.P.R. 35; 2001 NSCA 105, refd to. [para. 32].

Godin v. Godin (2012), 317 N.S.R.(2d) 204; 1003 A.P.R. 204; 2012 NSCA 54, refd to. [para. 32].

Soper v. Gaudet (2011), 298 N.S.R.(2d) 303; 945 A.P.R. 303; 2011 NSCA 11, refd to. [para. 32].

Jaskhs Enterprises Inc. et al. v. Indus Corp. et al., [2004] O.T.C. 859 (Sup. Ct.), refd to. [para. 33].

Culligan Canada Ltd. et al. v. Fettes et al. (2010), 366 Sask.R. 24; 506 W.A.C. 24; 326 D.L.R.(4th) 463; 2010 SKCA 151, refd to. [para. 33].

Sheppard v. Sheppard (1976), 12 O.R.(2d) 4 (C.A.), refd to. [para. 35].

Hefkey v. Hefkey, [2013] O.A.C. Uned. 29; 30 R.F.L.(7th) 65; 2013 ONCA 44, refd to. [para. 36].

Centre commercial Les Rivières ltée v. Jean Bleu inc., 2012 QCCA 1663, refd to. [para. 36].

Videotron ltée et Premier Choix: TVEC Inc. v. Industries Microlec produits electroniques Inc. et autres, [1992] 2 S.C.R. 1065; 141 N.R. 281; 50 Q.A.C. 161, refd to. [para. 36].

Daigle v. St-Gabriel-de-Brandon (Paroisse), [1991] R.D.J. 249 (Que. C.A.), refd to. [para. 36].

St. Elizabeth Home Society v. Hamilton (City) et al. (2008), 237 O.A.C. 25; 89 O.R.(3d) 81; 2008 ONCA 182, refd to. [para. 36].

Morrow, Power v. Newfoundland Telephone Co. et al. (1994), 121 Nfld. & P.E.I.R. 334; 377 A.P.R. 334 (Nfld. C.A.), refd to. [para. 37].

Sussex Group Ltd. v. Fangeat, [2003] O.T.C. 781; 42 C.P.C.(5th) 274 (Sup. Ct.), refd to. [para. 41].

Mileage Conference Group of the Tyre Manufacturers' Conference's Agreement, Re, [1966] 2 All E.R. 849 (R.P. Ct.), refd to. [para. 44].

Canada Metal Co. v. Canadian Broadcasting Corp. (1974), 48 D.L.R.(3d) 641 (Ont. H.C.), affd. (1975), 65 D.L.R.(3d) 231 (Ont. C.A.), refd to. [para. 44].

United Kingdom (Her Majesty's Commissioners of Customs and Excise) v. Barclays Bank plc, [2007] 1 A.C. 181; 360 N.R. 218; [2006] UKHL 28, refd to. [para. 45].

Attorney General v. Punch Ltd., [2003] 1 A.C. 1046; [2002] UKHL 50, refd to. [para. 45].

Z. Ltd. v. A-Z, [1982] 2 W.L.R. 288 (C.A.), refd to. [para. 45].

Baker v. Paul, [2013] NSWCA 426 (Aust.), refd to. [para. 45].

R. v. Wilson, [1983] 2 S.C.R. 594; 51 N.R. 321; 26 Man.R.(2d) 194, refd to. [para. 58].

Magder (Paul) Furs Ltd. et al. v. Canada (Attorney General) (1991), 52 O.A.C. 151; 6 O.R.(3d) 188 (C.A.), refd to. [para. 58].

Authors and Works Noticed:

Sharpe, Robert J., Injunctions and Specific Performance (2nd Ed. 1992) (2014 Looseleaf Update, Release 23), paras. 6.100 [para. 31]; 6.200 [para. 38]; 6.210 [para. 45].

Counsel:

Patricia D.S. Jackson and Rachael Saab, for the appellant;

Kevin Toyne and John Philpott, for the respondent.

Solicitors of Record:

Torys, Toronto, Ontario, for the appellant;

Brauti Thorning Zibarras, Toronto, Ontario, for the respondent.

This appeal was heard on December 10, 2014, by McLachlin, C.J.C., Abella, Rothstein, Cromwell, Moldaver, Karakatsanis and Wagner, JJ., of the Supreme Court of Canada. Cromwell, J., delivered the following judgment of the court in both official languages on April 16, 2015.