Docket: T-1498-16
Citation: 2020 FC 146
Montréal, Quebec, January 28, 2020
PRESENT: The Honourable Madam Justice Roussel
| BETWEEN:
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| BOWDY’S TREE SERVICE LTD.
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| Plaintiff
|
| and
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| THERIAULT INTERNATIONAL LTD.
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| Defendant
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| and
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| CRAIG THERIAULT
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| Contemnor
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ORDER AND REASONS
[1]
By order dated October 25, 2019 [Contempt Order], I found the Respondent, Mr. Craig Theriault, guilty of contempt of Court for failure to comply with the order of Mr. Justice Robert L. Barnes dated January 11, 2019. That order [Production Order] required Mr. Theriault, on behalf of the Defendant, Theriault International Marine and TI Marine 2018 Ltd [together the “Theriault Entities”
], to produce for inspection, at an examination in aid of execution, certain documents falling into seventeen (17) categories of information.
[2]
These contempt proceedings were bifurcated to deal separately with the contempt finding and sentencing, given the Federal Court of Appeal’s decision in Winnicki v Canada (Human Rights Commission), 2007 FCA 52 and the absence of Mr. Theriault at the contempt hearing held on May 6, 2019. As provided by the Contempt Order, the sentencing hearing was held on January 9, 2020 by means of a videoconference, with the Plaintiff appearing at the Federal Court in Vancouver, British Columbia, and Mr. Theriault appearing in person at the Federal Court in Fredericton, New Brunswick.
[3]
On January 2, 2020, the Plaintiff sought leave to file written representations, along with an attached list of authorities and draft bill of costs, in regards to the scheduled sentencing hearing. The next day, I issued an oral direction granting the Plaintiff’s request. I also directed that, if Mr. Theriault wished to file written submissions in response to the Plaintiff’s submissions on sentencing, he could do so providing he served them on the Plaintiff and filed them with the Court by the end of the day January 8, 2020. Mr. Theriault did not avail himself of this opportunity.
[4]
When the hearing began on January 9, 2020, I asked the parties whether they intended to adduce any evidence before making submissions on the appropriate sanction for the contempt finding. The Plaintiff’s counsel indicated that he did not. Mr. Theriault, on the other hand, indicated that he wished to testify in favour of a more lenient sentence.
[5]
Mr. Theriault testified that he was unable to comply with the Production Order because his wife, who was “part”
of the Defendant, was required to leave the country given the allegations of fraud made by the Plaintiff’s counsel, both in the statement of claim and in the correspondence exchanged between the parties prior to the statement of claim being issued. In his testimony, Mr. Theriault insisted that the allegations of fraud made by the Plaintiff’s counsel were false and that he was required to report this to the immigration authorities since his wife was going through the federal immigration spousal sponsorship program. After his wife was asked to leave Canada, he was unable to defend the Plaintiff’s action because he was a “mental emotional wreck”
for a period of approximately two (2) years. The last time he saw his wife was in June 2016. Since his wife was “part”
of the Defendant, the company dissolved after she left. Generally, Mr. Theriault blamed the Plaintiff’s counsel for taking his wife from him.
[6]
After hearing from Mr. Theriault, I invited the Plaintiff and Mr. Theriault to make their submissions regarding the appropriate sanction.
[7]
The Plaintiff submits that the Court should impose a fine on Mr. Theriault for an amount ranging from $2,000 to $3,000, together with costs in the amount of $5,662, as set out in the Plaintiff’s revised draft bill of costs. The Plaintiff also seeks an order that Mr. Theriault be ordered to produce the documents set forth in the Production Order within thirty (30) days of this sentencing order. The Plaintiff does not seek an automatic order for imprisonment in the event that Mr. Theriault does not comply.
[8]
Mr. Theriault submits that the “loss”
of his wife is sufficient punishment.
[9]
Section 472 of the Federal Courts Rules, SOR/98-106 [Rules] addresses the penalties, including fines and imprisonment, which may be imposed after a finding of contempt. It provides as follows:
| 472 Where a person is found to be in contempt, a judge may order that
|
472 Lorsqu’une personne est reconnue coupable d’outrage au tribunal, le juge peut ordonner :
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| (a) the person be imprisoned for a period of less than five years or until the person complies with the order;
|
a) qu’elle soit incarcérée pour une période de moins de cinq ans ou jusqu’à ce qu’elle se conforme à l’ordonnance;
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| (b) the person be imprisoned for a period of less than five years if the person fails to comply with the order;
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b) qu’elle soit incarcérée pour une période de moins de cinq ans si elle ne se conforme pas à l’ordonnance;
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| (c) the person pay a fine;
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c) qu’elle paie une amende;
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| (d) the person do or refrain from doing any act;
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d) qu’elle accomplisse un acte ou s’abstienne de l’accomplir;
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| (e) in respect of a person referred to in rule 429, the person’s property be sequestered; and
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e) que les biens de la personne soient mis sous séquestre, dans le cas visé à la règle 429;
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| (f) the person pay costs.
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f) qu’elle soit condamnée aux dépens.
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[10]
The principles of sentencing in contempt proceedings were recently reviewed by the Federal Court of Appeal in Tremaine v Canada (Human Rights Commission), 2014 FCA 192 [Tremaine]. The Court noted the following principles at paragraphs 19 to 26:
[19] In cases of civil contempt the usual principles of sentencing developed in relation to criminal contempt apply (Canada (Canadian Human Rights Commission) v. Canadian Liberty Net, [1996] 1 F.C. 787, [1996] F.C.J. No. 100 at page 801 (C.A.) [Liberty Net]; 9038-3746 Quebec Inc. v. Microsoft Corporation, 2010 FCA 151, [2010] F.C.J. No. 758 at paragraph 5). […]
[21] In order to determine what is a “fit” sentence in a particular case, the sentencing judge must consider the range of sentences for similar offences set out in prior jurisprudence and adjust the sentence depending on the objectives of sentencing and any aggravating and mitigating factors applicable to the case at hand (R. v. Nasogaluak, 2010 SCC 6, [2010] 1 S.C.R. 206 at paragraph 43; Professional Institute of the Public Service of Canada v. Bremsak, 2013 FCA 214, [2013] F.C.J. No. 1009 at paragraph 33 [Bremsak]).
[22] Courts also ought to consider the importance of specific and general deterrence for preserving public confidence in the administration of justice, while maintaining proportionality in sentencing (Canada (Minister of National Revenue) v. Marshall, 2006 FC 788, [2006] F.C.J. No. 1008 at paragraph 16 [Marshall]).
[23] Case law sets out a range of aggravating and mitigating factors that a judge may consider in imposing a fine and/or prison sentence for contempt. For instance, courts are instructed to consider the gravity of the contempt in the context of the case at hand, with regard to the administration of justice (see Baxter Travenol Laboratories of Canada, Ltd. v. Cutter Canada, Ltd., [1987] 2 F.C. 557, [1987] F.C.J. No. 205 at page 562 (C.A.) [Baxter]; Winnicki v. Canada (Human Rights Commission), 2007 FCA 52, [2007] F.C.J. No. 56 at paragraph 17 [Winnicki], citing with approval Lyons Partnership, L.P. v. MacGregor, 186 F.T.R. 241, [2000] F.C.J. No. 341). This includes both “the objective gravity of the contemptuous conduct [and] the subjective gravity of the conduct (
i.e. whether the conduct was a technical breach or a flagrant act with full knowledge of its unlawfulness)”
(see Marshall at paragraph 16; Bremsak at paragraph 35). Some jurisprudence has referred to the gravity of the offence as an “aggravating factor”
(see e.g. Marshall at paragraph 16). However, in other cases courts have simply noted that the gravity of the offence must be considered, thus suggesting that if the gravity is on the lower end of the scale, this may also serve as a neutral or mitigating factor (see e.g. Baxter at page 562; Canada (National Revenue) v. Ryder, 2014 FC 519, [2014] F.C.J. No 561 at paragraph 8).
[24] Other mitigating factors to consider are whether this is a first offence (e.g. Canada (Attorney General) v. De L’Isle, [1994] F.C.J. No. 955, 56 C.P.R. (3d) 371 (C.A) [sic] at paragraph 10; Winnicki at paragraph 17) and whether the offender has apologized, accepted responsibility or made good faith attempts to comply (Bremsak at paragraph 35, citing with approval Marshall at paragraph 16).
[25] On the other hand, where the offender has repeatedly breached court orders or has refused to apologize or take steps to comply with the order, these may be considered aggravating factors (ibidem at paragraph 16).
[26] While these enumerated factors provide helpful guidance with regard to sentencing, they are not exhaustive. Rather, a judge has wide discretion to determine the appropriate sanction for civil contempt, based on the facts of the case before him (Bremsak at paragraph 36).
[11]
Applying these principles to the present case, I agree with the Plaintiff that contempt proceedings involving the failure to abide by orders issued under section 231.7 of the Income Tax Act, RSC 1985, c 1 (5th Supp), to provide specific information and documents sought by the Minister of National Revenue are sufficiently similar to orders for production of documents in the context of execution proceedings. I am satisfied that they can offer guidance in determining the appropriate sentence in the circumstances of this case.
[12]
The following decisions illustrate the range of fines and costs that have been awarded in cases involving the failure to abide by production orders:
(a)
Canada (National Revenue) v Gray, 2019 FC 352 [Gray]: The respondent was ordered to pay a fine of $3,000 and costs in the amount of $2,384.86. Among the factors considered, the Court noted the respondent’s failure to appear at the sentencing hearing and the importance of ensuring that the respondent does not again breach orders of the Court. In terms of mitigating factors, the Court noted it had no evidence that the respondent had any history of non-compliance with court orders or of being found in contempt (paras 9-10, 12-13);
(b)
Canada (National Revenue) v Chi, 2018 FC 897: The respondent was ordered to pay a fine of $2,000 and costs in the amount of $3,500. Among the factors considered, the Court noted the seriousness of the contempt and the failure to provide a reasonable excuse for the non-compliance. The mitigating factors were the respondent’s apology, the production of some of the information and documents sought under the request for information and the fact that this was the respondent’s first offence (para 55);
(c)
Canada (National Revenue) v Blake, 2017 FC 901: The respondent was ordered to pay a fine of $3,000 and costs in the amount of $3,969.63. Among the factors considered, the Court noted the failure of the respondent to appear, the absence of submissions as to the appropriate sentence, the respondent’s opportunity to purge her contempt and her failure to provide a reasonable explanation for her actions and omissions (para 22);
(d)
Canada (National Revenue) v Schimpf, 2015 FC 1354: The respondent was ordered to pay a fine of $3,000 and costs in the amount of $7,000. Among the factors considered, the Court noted that there was no evidence of any prior contempt finding but that the respondent had refused to come to Court and address any possible mitigation factors (para 25);
(e)
Canada (National Revenue) v Bélanger, 2014 FC 127: The respondent was ordered to pay a fine of $1,500 and costs in the amount of $2,500. Among the factors considered, the Court noted that this was the respondent’s first conviction and that he had appeared at the contempt hearing. It also noted that although the respondent had produced some documents, he had failed to comply with the order by failing to produce all of them and that he had also attempted to abscond by not returning phone calls. The respondent was a chartered accountant and was in a good position to understand his tax obligations (para 35);
(f)
Canada (National Revenue) v Cameron, 2014 FC 482: The respondent was ordered to pay a fine of $5,000 and costs in the amount of $5,822.34. The Court noted that the respondent’s breach was intentional and that, notwithstanding his appearance at the contempt hearing, the respondent refused to acknowledge the requirements of the Court’s orders or the jurisdiction of the Court over his person (para 8);
(g)
Canada (National Revenue) v Vallelonga, 2013 FC 1155: The respondent was ordered to pay a fine of $3,000 and costs in the amount of $14,731.59. The Court took into account the respondent’s conduct throughout the proceedings and, in particular, the fact that he had completely ignored the Requirement for Information, demonstrated no true intention of ever cooperating with the applicant, ignored several letters sent and meetings set up by the applicant and that, when he did not ignore these letters, he replied by sending long and tedious letters demanding the immediate payment for advance costs, among other things. In terms of mitigating factors, the Court noted that the respondent had appeared before the Court and undertook to provide the applicant with the requested information and that it was the respondent’s first breach (paras 27-28).
See also: Canada (National Revenue) v Ryder, 2014 FC 519
(Fine: $1,250; Costs: $1,100)
Canada (National Revenue) v Marangoni, 2013 FC 1154
(Fine: $500; Costs: $1,000)
Canada (National Revenue) v Bosnjak, 2013 FC 399
(Fine: $3,000; Costs: $4,115.59)
[13]
In addition to imposing the above fines and costs on the contemnors, the Courts also ordered full compliance with the original orders within an average of thirty (30) to sixty (60) days.
[14]
Turning to the case at hand, I must emphasize that disobedience of a Court order is a serious matter (Gray at para 10). As the Court noted in Canada (Minister of National Revenue) v Marshall, 2006 FC 788 [Marshall], the “primary purpose of imposing sanctions is to ensure compliance with orders of the court. Specific and general deterrence are important to ensure continued public confidence in the administration of justice”
(Marshall at para 16; Tremaine at para 22). The production of documents for inspection at an examination in aid of execution, conducted in the context of the enforcement of a judgment, is an integral part of the administration of justice, and it is critical that parties comply with the production orders of this Court.
[15]
Upon review of the Court record, I find that Mr. Theriault has shown a repeated disregard for this Court’s orders and process. He failed to file a defence on behalf of the Defendant when he was originally served with the statement of claim, thus resulting in a default judgment being granted against the Defendant on June 28, 2017. When required to attend the examination in aid of execution, he produced only four (4) pages of bank records despite his obligation to, on behalf of the Theriault Entities, produce documents falling into seventeen (17) categories of information. He also took it upon himself to redact some of the information in the bank records, and, though he brought what he claimed were the incorporation documents of TI Marine 2018 Ltd, he refused to leave them with the Plaintiff’s agent. In addition, he chose not to attend the contempt hearing on May 6, 2019 despite being duly served, and he did not inform the Court that he would not be present.
[16]
I have considered Mr. Theriault’s testimony that he has been unable to obtain the requested documentation because he requires his wife’s signature and authorization to do so. He claims that she is “part”
of the Defendant and that he is no longer in contact with her since she had to leave Canada because of the actions of the Plaintiff’s counsel.
[17]
I am not persuaded by Mr. Theriault’s explanation.
[18]
First, the Production Order explicitly provided that if Mr. Theriault wished to seek relief from the requirement to produce any of the documents listed, whether in original or duplicate form, he could do so by bringing a motion for such relief within fourteen (14) days of the service of the Production Order. Mr. Theriault did not file any such motion with the Court.
[19]
Second, aside from his testimony, Mr. Theriault has adduced no evidence to establish that his wife was a director, officer or agent of any of the Theriault Entities. In fact, the evidence on the record shows that on September 19, 2016, Mr. Theriault was the sole director, officer and recognized agent of the Defendant corporation. It also shows that he remained so until at least June 26, 2018 (see Exhibits D and E referred to in the affidavit of the Plaintiff’s counsel, filed in support of the Plaintiff’s ex parte notice of motion with respect to examination in aid of execution at pages 53-54, 59-60). The Defendant’s corporate profile further indicates that the last change of directors occurred on May 6, 2014. The period for which Mr. Theriault was required to produce the information and documents was from January 1, 2015 until January 11, 2019. Mr. Theriault has failed to provide a reasonable, persuasive explanation for why he was unable to access the documentation relating to the Defendant when he was its sole director, officer and recognized agent.
[20]
Given the foregoing, I am not satisfied that Mr. Theriault’s disobedience of the Production Order amounted to a technical breach or a misunderstanding.
[21]
I would also like to comment on Mr. Theriault’s testimony that his wife left Canada because of the allegations of fraud made by the Plaintiff’s counsel. Mr. Theriault maintains that the parties’ correspondence and the statement of claim contain allegations of fraud, and that he was required to report these allegations to immigration authorities. Mr. Theriault did not clearly articulate what the allegations of fraud consisted of, but it seems that he is disputing the Plaintiff’s argument, that the Defendant sold the Plaintiff an entirely different marine engine than that which the Defendant had contracted to sell and deliver. Mr. Theriault did not reasonably explain what authority required him to report the so-called allegations of fraud, and it is not open to me, in the context of this sentencing hearing, to set aside a default judgment.
[22]
I also consider, as aggravating factors, Mr. Theriault’s failure to offer any apology for failing to comply with the Production Order or to admit any responsibility for his conduct. While he acknowledged his failure to abide by the terms of the Production Order, it was apparent at the sentencing hearing that he blames the Plaintiff’s counsel for the “loss”
of his wife and the inability to produce the documents requested for inspection. I also note that, to this day, he has not provided the information requested.
[23]
In determining the appropriate sentence, I am also required to consider any mitigating factors that would support a more lenient punishment. In the circumstances of this case, I note that Mr. Theriault participated in the sentencing proceedings and that there is no other evidence on the record of Mr. Theriault previously breaching a court order. Moreover, while the circumstances surrounding the departure of Mr. Theriault’s wife are unclear to me, I understand from his testimony that the departure of his wife has caused Mr. Theriault some grief and has impacted his actions.
[24]
After considering the relevant case law and the particular circumstances of this case, I am satisfied, in the exercise of my discretion, that a fine of $2,000 is appropriate to reflect the public interest in deterrence and the gravity of the contempt.
[25]
In terms of costs, the jurisprudence of this Court recognizes that a party who assists the Court in the enforcement of its orders and in ensuring respect for its orders should not be put out of pocket (Canada (Minister of National Revenue) v Bjornstad, 2006 FC 818 at para 12). While the Plaintiff seeks costs of $5,662 under Column V of Tariff B of the Rules, I find that costs in the amount of $4,000, inclusive of taxes and disbursements, are more reasonable and better reflect the cost awards in the cases cited above, the nature of the contempt and the amount owed by the Defendant pursuant to the default judgment.
[26]
Mr. Theriault shall also be required to comply with the Production Order.
[27]
The payment of the fine and the Plaintiff’s costs, as well as the communication of the information and documents listed in the Production Order, shall all be done within sixty (60) days of service of this Order. At the hearing, the Plaintiff’s counsel insisted that he was not seeking an automatic order of imprisonment in the event that Mr. Theriault does not pay the amounts ordered and does not provide the documents and information in the specified time frame. While I have concerns that the failure to provide for an automatic order of imprisonment will require this matter to come before the Court again, I believe it is appropriate to give Mr. Theriault the opportunity to comply with this Court’s orders before considering a penalty of imprisonment.
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