As a commercial litigator and a mediator, occasionally I am reminded that all too often, people disregard Court orders in the sincerely held belief that they will get away with it.  Unfortunately, they sometimes do.

For that reason alone, I appreciate those instances in which such people are actually held to account for their sins. 

The recent decision of the Court of Appeal in Canadian Western Bank v Canadian Motor Freight Ltd. et al. is such a case.

In this case, a Receiver was appointed over the assets of a debtor, which was a trucking company.  The Receivership Order required the debtor to turn over its assets, principally a fleet of trucks, to the Receiver without interference.

Instead of doing so, the debtor and its management moved the fleet of trucks to a yard owned by a different entity, United Group.

After unsuccessful negotiations with United Group to recover the trucks, the Receiver obtained an Asset Recovery Order requiring United Group to provide the Receiver with access to its yard so that the Receiver could remove the trucks.  United Group and its management failed to do so and the Receiver made an application to the court to enforce the Order.

The motion judge found that the debtor and its management, and United Group and its management, were in civil contempt of the Receivership Order as well as the Asset Recovery Order.  In a separate hearing, the motion judge sentenced the directing mind of the United Group to four days in prison.  He also ordered others involved to pay significant costs awards.

United Group appealed from the decision, suggesting the motion judge had failed to take into account that there had been negotiations between United Group and its management with the Receiver concerning the Asset Recovery Order.  However, United Group put forward no evidence to contradict the evidence of the Receiver that it had come to United Group’s yard where the trucks were located for the purpose of removing them, but that United Group had refused to allow the Receiver to do so.

For its part, the debtor and its management argued before the Court of Appeal that the movement of the trucks to United Group was undertaken in the normal course of business because there was no room at its own premises to house the trucks.  The Court of Appeal observed that the motion judge, in an earlier Order, had referred to the fact that the implementation of the Receivership Order was being delayed specifically in order to give the debtor’s management time to assemble the trucks at its own premises to allow the Receiver to take possession of them.  At that time, the debtor’s management had made no reference to any need to deliver the trucks to United Group’s yard. 

The Receivership Order had clearly stated that immediate and continued access to the debtor’s property was to be provided and that all such property was to be delivered to the Receiver upon request.  The debtor and its management did not comply with that Order even though the implementation of the Receivership Order had been delayed for that express purpose.

The debtor’s management indicated to the Court that it had not intended to breach the Receivership Order.  The Court of Appeal made it clear that this was not an excuse.  It confirmed well settled law that in order to establish civil contempt, all that is required is proof beyond a reasonable doubt of an intentional act that is in fact a breach of a clear Order of which the person committing the act had knowledge.

In conclusion, the Court of Appeal pointed out that “it is a fundamental principle that orders of a court are to be obeyed.  There are not to be stalled, and they are not to be negotiated.  Serious consequences are to be expected by anyone who willfully fails to obey a Court Order”.  The Appeal was dismissed and presumably, someone spent 4 days in jail.

Call me old fashioned but to me, this was a win for the good guys!