Laurin v. Paterson, 2011 ABQB 521

Court of Queen ’ s Bench of Alberta Citation: Laurin v. Paterson, 2011 ABQB 521 Date: Docket: 4803 155187 Registry: Edmonton Between: Claudette Marie Laurin Applicant - and - Perry Scott Paterson Respondent _______________________________________________________ Reasons for Judgment of the Honourable Madam Justice S.J. Greckol _______________________________________________________ I. Introduction [ 1 ] The parties to this divorce and matrimonial property action are locked in a bitter dispute over the assets acquired during the marriage. The Plaintiff, Ms.

Laurin, has brought contempt citations to enforce certain orders that were granted by the court to prevent disposition of property, and to ensure disclosure of financial information, so that civil process may be used to effect an equitable division of matrimonial property.

[2] Struggles to obtain disclosure and to exact compliance with court orders plague the court process in family cases, causingdelay as well as needless waste of the parties’ property and of the scant resources of the court.

Further, abuse of the court process or evena lackadaisical attitude towards process deepens the bitterness between the parties given that it is often one party who is unwilling toplay by the rules or is disinclined to see matters resolved, while the other pursues resolution with growing frustration as time and moneyare frittered away. [3] It is trite to observe that it is in the interests of both parties to have matters resolved quickly, finally, and as inexpensively aspossible; but it also bears emphasis that these goals also are in the interests of the judicial system since respect for and authority of thecourt are diminished if the process is undermined, causing harm to the institution that now works well for most.

It is for this reason thatcourts attempt to be scrupulous about observance of court orders in family disputes. [4] As set out in Dreco Energy Services Inc. v Wenzel, 2004 ABQB 517 at para 66, 365 AR 344 (new evidence allowed onappeal and matter remitted back to trial judge 2005 ABCA 185, 371 A.R. 11): "[t]he purpose of the civil contempt powers is to achievecompliance with the court Order in question, and, as demonstrated in this case, to uphold the authority of the court to control its process:United Nurses of Alberta v.

Alberta (Attorney General), (SCC), [1992] 1 S.C.R. 901" (see also Apotex FermentationInc v Novopharm Ltd. (1997), (MB KB), 77 CPR (3d) 306 (Man QB), var'd (1998), (MB CA),80 CPR (3d) 449 (Man CA)). Rowbotham JA for the Alberta Court of Appeal in Builders Energy Services Ltd v Paddock, 2009 ABCA153 at para 13, 457 AR 266 cited Dreco, observing that: "[t]he objectives of sanctions for civil contempt are twofold.

The primarypurpose is to achieve compliance with court orders and a second purpose is to punish the contemnor." [5] These principles are of utmost importance in family matters, where the interest of individuals, often children, areprofoundly affected by the conduct of the proceedings. [6] There are three court orders at issue on this application. Mr. Paterson has been found in contempt in relation to the firstcourt order. It is not possible for him to purge that contempt by rectifying the breach since the property in question was sold in defianceof the court order to an unrelated third party purchaser.

A penalty will be assessed. Mr. Paterson disputes that he was in contempt of thesecond court order. He responds to the allegation of contempt in relation to the third court order by submitting that he could not complywith the order since Ms. Laurin had the sheriff seize his assets, including information which he needs to satisfy the order. I have directedthat Mr. Paterson be given access to the boxes of information and that an order be prepared by counsel setting out precisely whatinformation he is to provide to complete disclosure. II. Facts [7] Ms. Laurin and Mr.

Paterson were married on August 14, 1993 after living together for one year. At that time, Ms. Laurinwas working as a teacher while Mr. Paterson was articling as a certified management accountant with an accounting firm. The partieshave one child, Lexis. Each has been involved in various occupations since the marriage. In April 2008, they purchased the AviationAcademy at Cooking Lake, Alberta. They bought land near Sherwood Park from Mr. Paterson’s parents and purchased planes for theAcademy.

They also bought a house in South Dakota and a modular home for placement on a parcel of land on the property nearSherwood Park. In the fall of 2008, the parties separated. [8] Ms. Laurin filed a divorce and matrimonial property action on November 15, 2010. Mr. Paterson has not filed a defence to thataction. [9] There is a long history of business and personal wrangling in this marriage and a myriad of court orders have been issued.

Itis unnecessary for present purposes to review and consider matters beyond the facts on which the contempt allegations are based. [10] Many questions remain concerning the various corporations in which the parties were involved. However, to the extentpossible at this time, it is necessary to identify the corporate and business entities pertinent to the issues.

I note that certain of theinformation below is not based on evidence but rather on the submissions of counsel jointly presented in a letter to the court from Mr.Paterson’s counsel dated August 12, 2011 in response to the court’s July 6, 2011 request for clarification of corporate information. Mr.Paterson’s counsel indicated in the letter that he had attempted to contact his client to discuss my queries, but had been unable to reach

him. As a result, the context set out below, to a certain extent, is a reflection of the beliefs and best information of counsel. The relevant companies include: (

a) Westana Leasing Corporation [Westana] - Bob Cramers was the shareholder of this company. A Corporate Registry search dated February 8, 2011 shows that the company ’ s shareholders at that time were 1145249 Alberta Ltd. as to 67 percent and 1145320 Alberta Ltd. as to 33 percent and that there had been a change in director/shareholder in September 2010. According to counsel ’ s letter, Mr. Cramers ’ shares in this company were acquired by Mr. Patterson using the holding company 1145249 Alberta Ltd. (63 percent), Donald Laurin using the holding company 1145320 Alberta Ltd. (32 percent) and Stan King (5 percent).

They say that Mr. King sold his shares to Mr. Paterson in 2007 and that Mr. Paterson and 1441023 Alberta Ltd. purchased Donald Laurin ’ s shares in 2010 for $1 million; $500,000 payable in March 2010 and the remainder in September 2010. The September 2010 payment was not made and apparently Donald Laurin has commenced a proceeding against Mr. Paterson for the balance of the purchase price. In his May 27, 2011 affidavit, Mr. Paterson deposed to an assignment of his interest in the Westana companies. A proposed “

summary of real estate acquisition ” for the Westana office space is attached as an exhibit. The “

summary ” appears to show that in return for Mr. Paterson ’ s transfer (through 1257634 Alberta Ltd.) of the Westana business premises, mortgage free, to Cameron Quilliam and Bob Cramers (through 1236393 Alberta Ltd), and his assignment of all of his shares in Westana and related companies to Westana Asset Management Corporation, 945752 Alberta Ltd. was to provide a transfer of the “ Denali Space ” (referred to below as the “ Bays ” ). The transfer ended up being to Denali rather than to him. He also was to receive $1.8 million.

He deposed that as the purchasers did not have $1.2 million in cash ($1.8 million less the $600,000 mortgage), he agreed to take back a mortgage on the property, but the mortgage ended up being to 1441023 Alberta Ltd. Attached as an exhibit to Ms. Laurin ’ s May 16, 2011 affidavit is a notice of intention to enforce security sent to the Aviation Academy by Westana, dated October 8, 2010. Ms. Laurin deposed that the signature on behalf of Westana was Mr. Paterson ’ s. It would appear from this material that, contrary to Mr.

Paterson ’ s affidavits, as of October 2010 and February 2011, he may have maintained an interest in Westana (either personally or though his corporate entities). (b) 1145249 Alberta Ltd. (previously Canalta Financial Group Inc.) [1145249]. A Corporate Registry search dated February 8, 2011 shows Mr. Paterson as the only shareholder and director of this company. (c) 1145298 Alberta Ltd. (previously Canalta Lease Management Corp.) - A February 8, 2011 Corporate Registry search shows that Mr.

Paterson was the sole shareholder of this company. (d) 1441023 Alberta Ltd. [1441023] - In his affidavit of May 27, 2011, Mr. Paterson deposed that Ms. Dahlman owned all of the issued share capital in this company until she transferred her interest in the shares to him on April 11, 2011 (as a result of Order #2). (

d) Canalta Flight Group Ltd. [Canalta] - In his May 27, 2011 affidavit, Mr. Paterson deposed to controlling this company. Counsel indicated in their letter that they believe he is the sole shareholder. (

e) Canalta Flight Group LLC [Canalta LLC] - a Delaware company which Ms. Laurin deposed that she and Mr. Paterson owned, with some interest being held by a third party. Counsel advised in their letter that John Schreurs of South Dakota was identified as the manager and Ms. Laurin and Mr. Paterson as “ members. ” Mr. Warren Yake, senior controller for Cooking Lake Aviation Academy, identified the Aviation Academy as having an interest in the Piper Meridian aircraft through Canalta LLC (John Schreurs) and Ms. Laurin. (

f) Denali Training Corp. [Denali]- Mr. Paterson stated in cross-examination on his affidavits that Ms. Dahlman is the owner of this company. (g) 945752 Alberta Ltd. [945752] - Counsel indicated they believe this is a non-related company controlled by Bob Cramers and Cameron Quilliam.

(h) 1257634 Alberta Ltd. [1257634] - Counsel advised that this corporation was controlled by Mr. Paterson. According to Mr. Paterson ’ s affidavit filed February 11, 2011, 1257634 at one time owned the business premises of Westana, on which 1441023 holds a $1,200,000 mortgage. (i) 1236393 Alberta Ltd. [1236393] - Cameron Quilliam and Bob Cramers may be the shareholders of this company. In his affidavit filed May 11, 2011, Mr. Paterson referred to this company as a Westana subsidiary. He deposed that it leased a number of its planes to the Aviation Academy.

He also stated that this company was involved in a lawsuit with 1441023 over the terms of the mortgage against the Westana business premises. In their letter to the court, counsel indicated Dan [sic] Laurin has claimed an interest in the mortgage granted by 1236393 Alberta Ltd. to 1441023 Alberta Ltd. that is registered against Westana ’ s business premises. (

j) Delta Leasing Corp. (previously T.N.R.P. Leasing Ltd.) - A February 8, 2011 Corporate Registry search shows that the company was struck on April 2, 2011. It had been owned by Mr. Paterson as to 50 percent and 880778 Alberta Ltd. as to 50 percent. (

k) Westana Lease & Mortgage Corp - A February 8, 2011 Corporate Registry search shows the shareholders were Mr. Paterson as to 50 percent and Pam Proud as to 50 percent. (

l) Cooking Lake Aviation Academy Inc. [Aviation Academy] - Counsel indicated they believed the shares of this company were purchased by Canalta for $700,000 on or about April 15, 2008. Counsel for Ms. Laurin advised that Mr. King signed annual returns for Dive In Inc., indicating it was the shareholder of the company. Ms. Laurin is the sole shareholder of Dive In Inc. Mr. King provided a letter to Ms. Laurin dated July 29, 2009, enclosing an annual return filed at Corporate Registry, showing that as of July 28, 2009, the sole shareholder was Dive In Inc. and the sole director was Ms. Laurin. Ms.

Laurin controls Cooking Lake Aviation Academy and the business owned by that corporation. Counsel apparently have been unable to locate any records to confirm the company shares were transferred by Canalta to Drive In Inc. In his affidavit filed February 11, 2011, Mr. Paterson deposed that the company was wholly owned by Canalta Flight Group [he did not identify which of the Canalta Flight Group companies he was referring to] and both he and Ms. Laurin were signing authorities. He attested that in the fall of 2008, Ms.

Laurin transferred the shares in the Aviation Academy to herself and he resigned as a director and shareholder. (m) 1368183 Alberta Ltd. [1368183] - Counsel for Ms. Laurin indicated that the shareholder of this company is Tracey Slattery of Kelowna , British Columbia, the registered office is in Sherwood Park, Alberta and that no other details are known. [ 11 ] Mr. Paterson conducted business largely through Westana. According to his counsel, Mr. Paterson ’ s business involved bringing people together who required money for their enterprises with people who wished to provide funds.

Westana earned a commission on such transactions. [ 12 ] On November 19, 2010, on application by Ms. Laurin, Marceau J. granted a preservation order [Order #1] that required interim preservation of personal property and any property owned by a corporation in which the parties held an interest. Order #1 further required that proceeds of any property sold must be held in trust. [ 13 ] In his affidavit filed May 27, 2011, Mr. Paterson acknowledged having sold a Piper Meridian airplane in April 2011 for $1,050,000.00, and attested to the disbursement of the proceeds.

He has been found in contempt of Order #1. [ 14 ] On February 17, 2011, Marceau J granted a further order that required Mr. Paterson to transfer back all property he had transferred to his personal and business partner, Alison Dahlman, either personally or through corporate interests [Order #2]. [ 15 ] On February 24, 2011, Macklin J granted an order that required Mr.

Paterson to provide an accounting of all assets sold or transferred, including assets held by any corporation in which he has or had an interest, and to have the proceeds of the sale of the planes held in trust pending further order of the court [Order #3]. [ 16 ] Ms. Laurin seeks the imposition of penalties for Mr. Paterson ’ s contempt of Order #1, as well as findings against him of contempt of Orders #2 and #3.

[ 17 ] She also asks for an order permitting the sale of assets seized pursuant to ex parte order granted April 29, 2011, at her discretion, the net proceeds to be accounted for, and dispensing with Mr. Paterson ’ s signature on any sale documents. She asks for an order directing that all support arrears (she later deposed to receiving support payments for March, April and May 2011) and costs awards owing to her are to be paid from the proceeds of the sale of the seized assets. She also seeks an order prohibiting Mr. Paterson or anyone on his behalf from attending at any location subject to a sale order or at Ms.

Laurin ’ s home or at the Cooking Lake Aviation Academy where she works. Further, she seeks interim costs of $100,000 to obtain appraisals, corporate valuations and forensic accounting, to be paid from his share of the sale proceeds. In addition, she asks for sole custody of their daughter. Other than the contempt issues, these additional matters were adjourned sine die and will await hearing before the case management judge. III. Issues [ 18 ] The following issues arise on this application: A. What penalty is appropriate for Mr. Paterson ’ s breach of Order #1? B. Has Ms. Laurin proved Mr.

Paterson ’ s breach of Orders #2 and #3 and, if so, what should be the consequences? IV. Legislation [ 19 ] The Alberta Rules of Court provide that: 10.52(1) Except when a person is before the Court as described in subrule (3)(a)(ii) or (v), before an order declaring a person in civil contempt of Court is made, notice of the application in Form 27 for a declaration of civil contempt must be served on the person in the same manner as a commencement document.

(2) If a lawyer accepts service of a notice of an application seeking an order declaring the lawyer ’ s client to be in civil contempt of Court, the lawyer must notify the client of the notice as soon as practicable after being served.

(3) A judge may declare a person to be in civil contempt of Court if (

a) the person, without reasonable excuse, (

i) does not comply with an order, other than an order to pay money, that has been served in accordance with the rules for service of commencement documents or of which the person has actual knowledge, (ii) is before the Court and engages in conduct that warrants a declaration of civil contempt of Court, (iii) does not comply with an order served on the person, or an order of which the person has actual knowledge, to appear before the Court to show cause why the person should not be declared to be in civil contempt of Court, (iv) does not comply with an order served on the person, or an order of which the person has actual knowledge, to attend for questioning under these rules or to answer questions the person is ordered by the Court to answer,

(

v) is a witness in an application or at trial and refuses to be sworn or refuses to answer proper questions, or (vi) does not perform or observe the terms of an undertaking given to the Court, or (

b) an enactment so provides. 10.53(1) Every person declared to be in civil contempt of Court is liable to any one or more of the following penalties or sanctions in the discretion of a judge: (

a) imprisonment until the person has purged the person ’ s contempt; (

b) imprisonment for not more than 2 years; (

c) a fine and, in default of paying the fine, imprisonment for not more than 6 months; (

d) if the person is a party to an action, application or proceeding, an order that (

i) all or part of a commencement document, affidavit or pleading be struck out, (ii) an action or an application be stayed, (iii) a claim, action, defence, application or proceeding be dismissed, or judgment be entered or an order be made, or (iv) a record or evidence be prohibited from being used or entered in an application, proceeding or at trial.

(2) The Court may also make a costs award against a person declared to be in civil contempt of Court.

(3) If a person declared to be in civil contempt of Court purges the person ’ s contempt, the Court may waive or suspend any penalty or sanction.

(4) The judge who imposed a penalty or sanction for civil contempt may, on notice to the person concerned, increase, vary or remit the penalty or sanction. V. Analysis

A. What Penalty is Appropriate for Mr. Paterson ’ s Breach of Order #1 ? [ 20 ] On November 19, 2010, Marceau J granted a consent preservation order that provided: 2. There shall be an interim preservation order for personal property and any property owned by a corporation in which the Plaintiff/Defendant hold an interest, and if any property is sold, the proceeds shall be held in trust. [ 21 ] In his affidavit filed May 27, 2011, Mr. Paterson acknowledged that he caused a 2006 Piper Meridian airplane owned by Canalta LLC to be sold in April 2011 for $1,050,000.00 USD (net proceeds $1,023,117.99 USD).

In his affidavit filed February 11, 2011, he deposed that he owned the Piper Meridian and conceded that it was matrimonial property. Mr. Paterson failed to comply with this provision of Order #1, without reasonable excuse. He is in civil contempt of Order #1. [ 22 ] Mr. Paterson apologizes for this contempt of the court order. He submits that it is a mitigating factor that the proceeds of sale of the Piper Meridian were used to pay down debt and ultimately will be accounted for on the distribution of assets.

He asserts that Canalta LLC loaned $453,865.92 Cdn of the net proceeds to 1441023, which applied that sum towards its mortgage indebtedness on the Deer Mountain property (Mr. Paterson ’ s residence); and loaned $530,126.44 of it to Denali, which used it to pay out a mortgage registered against a condominium in Canmore owned by it. Documentation confirming these loans is not before the court. [ 23 ] On May 11, 2011, Eidsvik J required that the proceeds from the sale of the Piper Meridian be deposited into the trust account of McGee Richard.

By the time that order was granted, however, the funds may have been disbursed. Even if they were not, Order #1 already required that the proceeds from any sale be held in trust. Mr. Peterson failed to comply with that aspect of Order #1, without reasonable excuse, for which he is in civil contempt. Whether the funds were disbursed by loaning them to corporate entities and defraying debt is not a mitigating factor. In any event, it is not clear that the shares of 1441023 had been transferred to Mr. Paterson before the “ loan ” to that company was made.

In addition, the other “ loan ” was made to a company in which Mr. Paterson has no apparent shareholder ’ s interest. [ 24 ] Mr. Paterson notes that Ms. Laurin has possession and use of the Aviation Academy and up to 5.8 million dollars worth of assets, while he is out of work due to the seizure of assets. In addition, he contends that Ms. Laurin does not come with clean hands since she herself attempted disposition of the Piper Meridian. [ 25 ] I accept the explanation from Ms. Laurin that her attempt to transfer an interest in the Piper Meridian was an effort to prevent disposition of assets by Mr.

Paterson. [ 26 ] She suggests that costs should be awarded against Mr. Paterson for the amount (about $3,800.00) it cost her to retain the bailiff to seize property and her solicitor-client costs relating to enforcement of Order #1, and that a short period of incarceration should be imposed on Mr. Paterson. In her lawyer ’ s written submissions, she seeks imprisonment, a fine and a costs award of $10,000 payable immediately. [ 27 ] In my view, it is appropriate and I order that Mr. Paterson pay Ms.

Laurin the seizure costs that she necessarily incurred to preserve assets (about $3,800.00) and that he pay her solicitor-client costs for enforcement of Order #1, including the present application, all payable forthwith. [ 28 ] It appears to me that Mr. Paterson has little respect for the court process. His contempt of Order #1 was self-serving and is aggravated by the fact that he attempted to sell two other planes, although the completion of those sales was thwarted by the court process. [ 29 ] Mr. Paterson must be assessed a penalty for his inexcusable breach of Order #1.

He must understand that the time has come for him to cooperate with the court process. I assess him a fine of $5,000, payable forthwith.

[30] Incarceration in a civil matter is properly reserved for enforcement purposes when all other civil processes have failed or,sparingly, for purposes of punishment in the most egregious of circumstances. Mr. Paterson’s contempt of Order #1 has not been shownto fall within those parameters, to date. B. Has Ms. Laurin Proved Mr. Paterson’s Breach of Orders # 2 and #3 and, if so, What are the Consequences? 1. Order #2 [31] On February 17, 2011, Marceau J granted an order that provided: 1.

The defendant shall forthwith transfer back all property he has transferred to Allison Dahlman, either personally or throughcorporate interests. [32] Mr. Paterson and Ms. Dahlman have a personal and professional relationship. Ms. Laurin applied for Order #2 because shewas of the view that matrimonial assets had found their way into the legal possession of Ms.

Dahlman or that of one of her corporateentitles. [33] Contempt allegations must be proven strictissimi juris (Vidéotron Ltée v Industries Microlec Produits Électroniques Inc, (SCC), [1992] 2 SCR 1065 at 1078; Canadian Union of Public Employees, Local 301 v Montreal (City), (SCC), [1997] 1 SCR 793 at paras 66-67; Alberta Union of Provincial Employees v Continuing Care Employees' BargainingAssn, 2002 ABCA 148, 303 AR 137 para 148). [34] In LMB v IJB, 2004 ABCA 73 at para 11, 346 AR, the Alberta Court of Appeal held: In Michel v. Lafrentz (1998), 219 A.R. 192, [1998] A.J.

No. 1489, 1998 ABCA 231 at para. 21, Côté J.A. cites a number of previouscases to support his finding that intent to disobey the court is not a necessary requirement for a finding of contempt: "[w]here someone isordered by the court to do something, he or she must use a sufficient degree of diligence to perform, or to have the act performed." Thissame principle was espoused recently by the British Columbia Court of Appeal in Topgro Greenhouses Ltd. v. Houweling (2003), 184B.C.A.C. 118, [2003] B.C.J. No. 1382, 2003 BCCA 355 at para. 6, where Smith J.A., citing R. v.

Perkins, (BC CA),[1980] 4 W.W.R. 763 (B.C.C.A.), stated: To knowingly breach a court order is to commit a contempt of court. All that is necessary to establish the contempt is proof of deliberateconduct that has the effect of contravening the order; an intent to bring the court into disrepute or to interfere with the due course ofjustice or with the lawful process of the court is not an essential element of civil contempt. [35] In his letter to the court of August 12, 2011, counsel for Mr. Paterson indicated that he believes Mr.

Paterson’s position isthat he did not transfer, personally or through corporate interests, property to Ms. Dahlman. There were loans made by corporations toDenali. The loans belong to the corporations, the shares of which are considered to be matrimonial property. The money received byDenali was used to acquire property, but Denali has no equity in that property. [36] Nevertheless, Mr. Paterson attests in his affidavit of May 27, 2011 to having complied with Order #2: 4.

Order 2 directed that I transfer back all property that I transferred to Allison Dahlman (“Dahlman”) either personally or throughcorporate interests. Dahlman has always owned all the issued share capital of 1441023 Alberta. Ltd. Although I had never transferredshares of 1441023 Alberta Ltd. to Dahlman I asked her to transfer the shares she held in 1441023 Alberta Ltd. to me.

Dahlman and Isigned a Transfer of Stock Agreement on April 11, 2011, whereby she transferred her interest in the 1441023 Alberta Ltd. shares to me.Attached hereto and marked as Exhibit “B” to this my Affidavit is a copy of the Transfer of Stock Agreement that Dahlman and I signed.

[ 37 ] A chronology of land purchases and financing [Chronology] involving Mr. Paterson or his companies and Ms. Dahlman or her companies was provided by counsel for Ms. Laurin and is largely reliant on Mr. Paterson ’ s information. (

a) Westana sale proceeds and the Bays [ 38 ] Mr. Paterson deposed in an affidavit filed February 11, 2011 that he and Don Laurin, Ms. Laurin ’ s brother, had acquired control of Westana from Bob Cramers, with Stan King, Westana ’ s in-house counsel, and that after Mr. King sold his interest to Mr. Paterson, the share structure was: Mr. Paterson 68 percent and Mr. Laurin 32 percent. [ 39 ] In his affidavit filed February 11, 2011, Mr. Paterson deposed that because of the divorce proceedings, he and Mr. Laurin were unable to continue working together and, therefore, he agreed to buy out Mr.

Laurin for $1,000,000 and severance pay. The lump sum was to be paid in two installments of $500,000 each. He attested that the March payment was made but that once he was forced out of Westana, he could not pay the second installment or continue paying severance pay. [ 40 ] Mr.

Paterson also deposed that on August 20, 2010 [before Order #1 was granted], he sold the Westana business premises (through 1257634) to Cameron Quilliam and Bob Cramers (through 1236393 Alberta Ltd), assigned his shares and interest in Westana and certain other related companies [Westana Lease Management Corp., Westana Lease & Mortgage Inc., maybe Westana Lease Capital Corp., etc.] to Westana Asset Management Corporation (presumably controlled by Bob Cramers and Cameron Quilliam) and resigned as a director of those companies.

In return, 945752 (presumably controlled by Bob Cramers and Cameron Quilliam) was to provide a transfer of the Bays. Ultimately, however, the Bays were transferred to Denali rather than to Mr. Paterson or to his holding company. He also was to receive $1.8 million.

He deposed that as the purchasers did not have $1.2 million in cash ($1.8 million less the $600,000 mortgage), he agreed to take back a mortgage on the property, but the mortgage ended up being held by 1441023. [ 41 ] The court, to date, has not been provided with documentation confirming this agreement, other than an e-mail from Cameron Quilliam and the proposal. In her May 16, 2011 affidavit, Ms. Laurin indicated that no share purchase agreement relating to the Westana corporations had been produced to that date. [ 42 ] Assuming that this agreement was entered into, Mr.

Paterson has acknowledged that part of the proceeds from the sale of the Westana business premises and his holding company ’ s shares in the Westana corporations ended up as a mortgage to 1441023, which Mr. Paterson deposes was owned by Ms. Dahlman at the time. Those proceeds should have been paid to 1257634 and/or 1145249 (Mr. Paterson ’ s holding company) as the sellers respectively of the Westana business premises and Westana shares. There is no evidence that the mortgage was assigned to 1441023 as a form of loan. In my view, the transaction is properly captured by Order #2. [ 43 ] Ms.

Dahlman appears to have transferred all shares of 1441023 to Mr. Paterson. Mr. Paterson has not been proved to be in contempt of Order #2 in relation to that portion of the Westana sale proceeds represented by the mortgage held by 1441023. [ 44 ] In addition to the cash portion of the sale proceeds, Mr. Paterson stated in his affidavit, filed February 11, 2011, that Bob Cramers and Cameron Quilliam agreed to cause 945752 to transfer the Bays, which Denali had been leasing, to Denali. In his cross- examination on affidavit, Mr. Paterson conceded that Ms.

Dahlman had no connection to the Bays other than operating her business out of them and that she was not making lease payments on them. [ 45 ] According to the Chronology prepared by counsel for Ms. Laurin using information disclosed by Mr. Paterson: • The Bays initially were owned by 945752; • In December 2009, Denali signed a lease with 945752 for the Bays;

• The Bays, which had a value of about $550,000, were transferred by 945752 to 1257634 [Mr. Paterson ’ s company] as

part consideration for his transfer of the Westana office building in Sherwood Park, Alberta. [However, the transfers of land, dated August 20, 2010, identify the transferee as Denali] • Mr. Paterson signed as transferee (or agent) for the transfer of both Bays and swore the affidavit of value before Mr. King on August 20, 2010. The consideration was shown as “ cash ” and the property was shown as having a combined value of $550,000.00; • Mr.

Paterson states that Denali is indebted to 1257634 [his company] in the sum of $550,000.00 as a result of having received the Bays from it, and this amount has not been paid [no documents have been obtained substantiating same and the transfers of land show transfers directly from 945752 to Denali]. [ 46 ] Counsel for Ms. Laurin argues that Mr. Paterson sold his interest in Westana, which was matrimonial property, and as part of that transaction he received the Bays, which were transferred to Denali. Counsel argues that Order #2 required that the Bays be transferred from Danali to Mr.

Paterson as they are traceable matrimonial property. [ 47 ] Mr. Paterson caused a portion of the proceeds from the sale of his holding company ’ s Westana shares and his other company ’ s Westana business premises, which were matrimonial property, to be transferred to Denali via the transfer of the Bays from 945752. There is no evidence of a loan from 1257634 and/or 1145249 to Denali. [ 48 ] Order #2 binds Mr. Paterson. Ms. Dahlman and Denali are not parties to these proceedings. However, Mr.

Paterson was required to “ use a sufficient degree of diligence to perform, or to have the act performed ” of having the Bays transferred by Denali to him or to a company owned by him in order to comply with Order #2. There is no evidence before me that he has taken any steps whatsoever to do so. If Ms. Dahlman, through Denali, resists transferring the Bays, Mr. Paterson and/or Ms. Laurin may have no choice but to take legal steps against them. [ 49 ] Mr. Paterson is in contempt of Order #2.

He is given the opportunity to purge this contempt by taking all necessary steps to have the Bays transferred from Danali to himself or a company owned by him. I reserve jurisdiction to consider submissions on any further means by which he may purge his contempt and on the question of penalty. The parties are to bring this matter before me for disposition before the end of September 2011. (

b) Cooking Lake hangar [ 50 ] According to the Chronology prepared by counsel for Ms. Laurin: • The Cooking Lake hangar was sold by 1368183 Alberta Ltd. to 1441023 [then apparently owned by Ms. Dahlman and now owned by Mr. Paterson] for $325,000. The transfer was signed on December 15, 2008 and registered on June 19, 2009 [prior to Order #1]; • Stanley King represented 1441023 regarding this acquisition and swore an affidavit of transferee as agent on January 12, 2009 before Don Laurin as Commissioner; • Ms.

Laurin registered a certificate of lis pendens against the Cooking Lake hangar property on November 16, 2010; • 1441023 borrowed the funds required to complete this acquisition. Mr. Paterson believes the money was loaned by Canalta . • 1441023 transferred its interest in the Cooking Lake hangar to Denali on November 23, 2010.

[ 51 ] Order #1 is dated November 19, 2010. [ 52 ] According to the August 12, 2011 letter to the court from Mr. Paterson ’ s counsel, he believes that his client ’ s position is that the hangar was acquired by Denali with funds that it borrowed from Canalta . Denali has no equity in the hangar. It owes Canalta for the whole purchase price of the hangar. [ 53 ] In his affidavit filed February 11, 2011, Mr. Paterson deposed that he needed space for his Piper Meridian and when a hangar came available at Cooking Lake, he purchased it through Denali, using money from Westana .

He acknowledged the hangar was matrimonial property. In his cross-examination on affidavit, he said the money for the hangar came from Westana and that Ms. Dahlman never put any money into it. He said that other than paying expenses for the Appleton Close property, she had not contributed any money to any other assets held by 1441023. [ 54 ] The source of the money used to purchase the hangar from 1368183 remains a question. However, according to Mr. Paterson, the funds came from one of the companies in which he had a shareholder ’ s interest at the time.

Either Westana or Canalta was the equitable owner of the hangar. [ 55 ] The transfer of the hangar to Denali was subsequent to Orders #1 and #2. There is no or not sufficient documentary evidence presently before the court relating to the transactions involving the hangar. It is unclear whether Canalta or Westana loaned or gave the money to 1441023 so that it could purchase the hangar. Mr.

Paterson now owns all of the shares of 1441023 and should have access to all of the corporate data surrounding this transaction. [ 56 ] I order that by September 9, 2011, he file with the court evidence of the sale, loan or other transactions, if any, relating to the hangar in which 1441023 and/or Canalta were involved, including, but not limited to, the acquisition of the hangar from 1368183, the terms of any loan from Canalta or Westana and the terms of the transfer to Denali. If Ms. Laurin then wishes to pursue the contempt application in terms of Mr.

Paterson ’ s possible breach of Order #2 in relation to the hangar, she is to bring the matter before me for disposition before the end of September 2011. (

c) Canmore condominium [ 57 ] According to Ms. Laurin ’ s counsel ’ s Chronology relating to the Canmore condominium: • It was purchased by 1441023 [Ms. Dahlman ’ s company at the time] on or about November 6, 2009; • The purchase price was $890,000.00 • Money was loaned to 1441023 to provide the down payment. [The Chronology notes that Mr.

Paterson believes that Canalta loaned $325,000.00 to 1441023 as a down payment]; • 1441023 assumed the financing that was registered against title to the Canmore condominium in the sum of approximately $585,000.00 (original mortgage amount was $623,280.00 but had been paid down by the date of the acquisition); • Ms. Laurin registered a certificate of lis pendens against the Canmore condominium on November 16, 2010; • 1441023 transferred the Canmore condominium to Denali on November 23, 2010;

• The mortgage on the property was paid out using funds from Canalta LLC ’ s Piper Meridian sale in April 2011. [ 58 ] In their letter to the court, counsel indicated that they believe Denali owns the Canmore condominium, purchased by it with money it received by way of loan from Mr. Paterson, Ms. Dahlman and an assumption of mortgage. The mortgage was paid off with funds loaned to Denali by Canalta LLC, which the latter received from the sale of the Piper Meridian.

They indicated that while Denali owns the condominium, it is indebted to others for the value of it and Denali has no equity in the condominium. [ 59 ] In his cross-examination on affidavit, Mr. Paterson testified that Ms. Dahlman had paid 13 of the mortgage payments on the Canmore condominium. [ 60 ] Ms. Laurin argues that as Canalta and Canalta LLC were matrimonial property, the funds given or loaned by those companies to 1441023 and/or Denali also are matrimonial property. [ 61 ] Ms.

Laurin submits that Order #2 required that the Canmore condominium [or at least Canalta and Canalta LLC ’ s contributions toward it] be transferred back to Mr. Paterson or one of his companies as it is traceable matrimonial property. [ 62 ] The transfer of the condominium to Denali was subsequent to Order #1 and #2. There is no or not sufficient documentary evidence before the court relating to the transactions involving the condominium. It is unclear whether Canalta indeed loaned or gave the money to 1441023 so that it could purchase the condominium. Mr.

Paterson owns all of the shares in Canalta, is a “ member ” of Canalta LLC and now apparently owns 1441023 as well. He should have access to all of the corporate data surrounding the transactions relating to the condominium. [ 63 ] I order that by September 9, 2011, he file with the court evidence of the transactions, if any, relating to the condominium in which 1441023, Canalta and/or Canalta LLC were involved, including, but not limited to, the acquisition of the condominium by 1441023, the alleged loan from Canalta, the terms on which any mortgage payments were made by Ms.

Dahlman, the terms of the transfer to Denali and any assumption by it of the mortgage and the terms of any loan to Denali from Canalta LLC. [ 64 ] If Ms. Laurin then wishes to pursue the contempt application in terms of Mr. Paterson ’ s possible breach of Order #2 in relation to the condominium, she is to bring the matter before me for disposition before the end of September 2011. (

d) Deer Mountain [ 65 ] According to the Chronology relating to the Deer Mountain property, where Mr. Paterson resides: • Deer Mountain was purchased by 1441023 on or about June 9, 2010 for $1,230,000.00; • Mortgage financing was for $850,000.00 through the Bank of Montreal. • Mr. Paterson states that he believes the down payment of $380,000.00 was loaned by Canalta to 1441023. • Canalta LLC loaned $453,865.92 Cdn of the net proceeds from the sale of the Piper Meridian to 1441023, which applied that sum towards its mortgage indebtedness on the Deer Mountain property. [ 66 ] In his letter to the court, counsel for Mr. Paterson indicated that he was advised by his client that Deer Mountain was

purchased by 1441023 with funds loaned to it by Ms. Dahlman and Mr. Paterson and mortgage financing from BMO and that a portion of the proceeds from the sale of the Piper Meridian was loaned to 1441023 and used to pay down a portion of the BMO mortgage indebtedness associated with Deer Mountain. [ 67 ] In his affidavit filed February 11, 2011, Mr. Paterson deposed that the down payment for the Deer Mountain property came from him through Westana and that this money was matrimonial property. [ 68 ] In cross-examination on his affidavits, Mr.

Paterson testified that 1441023 only held assets relating to him and matrimonial property. He further swore that Ms. Dahlman had not put money into the Deer Mountain property. [ 69 ] In his affidavit sworn May 27, 2011, Mr. Paterson stated that he and Ms. Dahlman executed a transfer of stock agreement on April 11, 2011, whereby she transferred her interest in the 1441023 shares to him. Counsel for Ms. Laurin confirmed that a corporate search of that numbered company revealed that the transfer happened on May 31, 2011. [ 70 ] Accordingly, Mr.

Paterson has not been shown to be in breach of Order #2 in relation to the Deer Mountain property. (

e) Appleton Close [ 71 ] According to the Chronology relating to the Appleton Close property in Sherwood Park: • This residence was purchased in August 2009 by 1441023; • Ms. Dahlman provided the $100,000.00 deposit by way of a loan to 1441023; • The balance of the purchase price was provided by way of mortgage financing in the sum of $360,000.00 by Alberta Finance and Mortgage; • Ms.

Laurin registered a certificate of lis pendens against the Appleton Close property on November 16, 2010; • 1441023 transferred the Appleton Close property to Denali on or about November 23, 2010. [ 72 ] In his affidavit filed February 11, 2011, Mr. Paterson deposed that Ms. Dahlman was renting out the Appleton Close property. [ 73 ] In cross-examination on his affidavit, Mr. Paterson said that other than paying expenses for the Appleton Close property, Ms. Dahlman had not contributed any money to any other assets held by 1441023. Given that evidence and as Mr.

Paterson now has access to the corporate records for 1441023 as the sole shareholder of that company, I order that by September 9, 2011, he file with the court evidence of how 1441023 financed the deposit or downpayment on this property. [ 74 ] If Ms. Laurin then wishes to pursue the contempt application in terms of Mr. Paterson ’ s possible breach of Order #2 in relation to the Appleton Close property, she is to bring the matter before me for disposition before the end of September 2011. (

g) R44 helicopter

[75] In his affidavit filed February 11, 2011, Mr. Paterson deposed that he owned a R44 helicopter, which he transferred into Ms.Dahlman’s name so that she could obtain her helicopter pilot’s licence. He acknowledged that it is a matrimonial asset. [76] In his May 27, 2011 affidavit, Mr. Paterson deposed that: 5. I caused Canalta Flight Group Ltd., a corporation that I control, to transfer to Dahlman a Robinson Helicopter...

Dahlman did notprovide me with any consideration for the helicopter when I transferred it to her and I considered Dahlman to be the bare legal titleholder of the helicopter with Canalta Flight Group Ltd. having retained the beneficial interest in the helicopter. 6. As directed by Justice Marceau (Order 2), Dahlman transferred the helicopter back to Canalta Flight Group Ltd. for noconsideration. A copy of the Bill of Sale dated April 11, 2011, is attached hereto and marked as Exhibit “C” to this my Affidavit. TheRobinson Helicopter has always been considered by Claudette and I to be matrimonial property. [77] Mr.

Paterson has not been shown to be in contempt of Order #2 in terms of the R44 helicopter. (

g) Miscellaneous Matrimonial Assets [78] In his affidavit filed February 11, 2011, Mr. Paterson deposed that after he was forced out of Westana, he had no income and,therefore, he transferred a Cadillac Escalade to Ms. Dahlman for about $30,000. [79] There is no evidence before the court substantiating this transaction or of whether the vehicle has been transferred back toMr. Paterson. The parties did not argue whether Mr. Paterson is in contempt of Orders #2 for having failed to “use a sufficient degree ofdiligence to perform this action, or to have the act performed...” of transferring the vehicle back to him.

I reserve jurisdiction to deal withthis issue on the request of counsel. 2. Order #3 [80] On February 24, 2011, Macklin J granted an order that provided at paras 6-7: 6. The Defendant shall forthwith provide an accounting of all assets sold or transferred, including assets held by any corporation in whichhe has or had an interest. Such accounting shall include the back up documentation. 7. The proceeds of the sale of the planes shall be held in trust pending further order of the court. In the event the parties agreed to adistribution, a consent order shall issue prior to any funds being disbursed. [81] Mr.

Paterson argues that he has been unable to comply with para 6 of Order #3 that requires him to provide an accounting ofall assets sold or transferred, including assets held by any corporation in which he has or had an interest, because his files are containedin 16 boxes that have been seized at the instance of Ms. Laurin. As noted in LMB at para 12: Of course, civil contempt proceedings have serious consequences and a criminal element to them. Sometimes, even where the necessaryelements are made out, making such a finding may be inappropriate in the circumstances.

For example, where noncompliance is due tocircumstances beyond the control of the party alleged to be in contempt: Metaxas v. Galaxis, (FC), [1989] 1 F.C. 386(T.D.).

[ 82 ] I accept Mr. Paterson ’ s explanation as to why he has not provided a full accounting and backup documentation to date; i.e. some of the materials he requires may be in the 16 boxes of documents under seizure. The documents required for disclosure were not within his possession so that this failure to comply with Order #3 was not within his control. I have directed that Mr. Paterson be provided with access to the 16 boxes. I have also asked the parties to prepare an order setting out precisely what documentation is required by Ms.

Laurin in order to complete disclosure. [ 83 ] The application for a contempt citation with respect to para 6 of Order #3 is adjourned sine die . I reserve jurisdiction to deal with this application further should the need arise. [ 84 ] With respect to para 7 of Order #3, the distribution of the sale proceeds of the Piper Meridian is part of the finding of contempt of Order #1 and the requirement to seek a transfer back of any of the sale proceeds transferred to Ms. Dahlman, either directly or through corporate interests, is part of Order #2. As part of Order #3, Mr.

Paterson is required to give an accounting and to provide backup documentation of the distribution of the sale proceeds once he has obtained access to the boxes of seized documents. [ 85 ] Mr. Paterson is in the process of attempting to dispose of two other planes. In his affidavit sworn May 27, 2011, he stated: 7. ... I have always identified as my property a 1984 Nanchang CJ-6A Aircraft ( “ Nanchang ” ) and a 1973 Yak 18 - T aircraft (Yak ” ). I arranged for the disposition of the Nanchang and the Yak to John Mazurek ( “ Mazurek ” ).

Mazurek agreed to purchase the Nanchang for $45,000.00 and the Yak for $65,000.00. The disposition of the Nanchang and the Yak was subject to inspection. The Yak inspection has been completed. I have not received any money, to date, for the Nanchang or the Yak from Mazurek, with the exception of a $10,000 deposit that Mazurek placed with Canalta Flight Group Ltd. [Canalta]. I propose that we conclude the disposition of the Nanchang and the Yak to Mazurek and receive the proceeds from the sale of these planes and place proceeds in trust.

I believe, based on my experience with aircraft, that the amount that Mazurek has agreed to pay represents fair market value. [ 86 ] Order #1 continues to prevent sale of these planes without Ms. Laurin ’ s consent. Para 7 of Order #3 requires that: “ ...the proceeds of the sale of the planes shall be held in trust pending further order of the court. In the event the parties agreed to a distribution, a consent order shall issue prior to any funds being disbursed. ” [ 87 ] Mr.

Paterson, by September 9, 2011, is to provide a report and evidence to the court on the status of this “ disposition ” and the deposit. [ 88 ] If Ms. Laurin then wishes to pursue the contempt application in terms of Mr. Paterson ’ s possible breach of Order #1 or Order #3 in relation to these planes, she is to bring the matter before me for disposition before the end of September 2011. VI. Conclusion A. Court Order #1 [ 89 ] Mr. Paterson is in contempt of Order #1. He is to pay Ms.

Laurin the seizure costs that she incurred to preserve assets (about $3,800) and her solicitor-client costs for enforcement of Order #1, including the present application, all payable forthwith. In addition, he is assessed a fine of $5,000. B. Court Order #2 [ 90 ] Mr. Paterson caused a portion of the proceeds from the sale of his company ’ s Westana business premises and his other company ’ s Westana shares to be transferred to Denali via the transfer of the Bays to Denali from 945752. There is no evidence before me that he has taken any steps whatsoever to effect a transfer back as required by Order #2. Mr.

Paterson is in contempt of Order #2. He

is given the opportunity to purge this contempt by taking all necessary steps to have the Bays transferred from Danali to himself or a company owned by him. I reserve jurisdiction to consider submissions on any further means by which he may purge his contempt and on the question of penalty. The parties are to bring this matter before me for disposition before the end of September 2011. [ 91 ] I order that by September 9, 2011, Mr.

Paterson file with the court evidence of the sale or loan transactions, if any, relating to the hangar in which 1441023 and/or Canalta were involved, including the acquisition of the hangar from 1368183 and the transfer to Denali. If Ms. Laurin then wishes to pursue the contempt application in terms of Mr. Paterson ’ s possible breach of Order #2 in relation to the hangar, she is to bring the matter before me for disposition before the end of September 2011. [ 92 ] I order that by September 9, 2011, Mr.

Paterson file with the court evidence of the transactions, if any, relating to the Canmore condominium in which 1441023, Canalta and/or Canalta LLC were involved, including, but not limited to, the acquisition of the condominium by 1441023, the alleged loan from Canalta, the terms on which any mortgage payments were made by Ms. Dahlman, the terms of the transfer to Denali and any assumption by it of the mortgage and the terms of any loan to Denali from Canalta LLC. [ 93 ] If Ms. Laurin then wishes to pursue the contempt application in terms of Mr.

Paterson ’ s possible breach of Order #2 in relation to the Canmore condominium, she is to bring the matter before me for disposition before the end of September 2011. [ 94 ] Mr. Paterson has not been shown to be in breach of Order #2 in relation to the Deer Mountain property. [ 95 ] I order that by September 9, 2011, Mr. Paterson file with the court evidence of how 1441023 financed the deposit or down payment on the Appleton Close property. [ 96 ] If Ms. Laurin then wishes to pursue the contempt application in terms of Mr.

Paterson ’ s possible breach of Order #2 in relation to the Appleton Close property, she is to bring the matter before me for disposition before the end of September 2011. [ 97 ] Mr. Paterson has not been shown to be in contempt of Order #2 in terms of the R44 helicopter. [ 98 ] Mr. Paterson transferred a Cadillac Escalade to Ms. Dahlman for about $30,000. The parties did not argue the issue of whether he is in contempt of Order #2 for having failed to seek a transfer back of the vehicle. I reserve jurisdiction to deal with the issue on the request of counsel. C. Court Order #3 [ 99 ] I have ordered that Mr.

Paterson be provided with access to the seized boxes that contain documentation which he requires to comply with Order #3. I have also directed that the parties prepare an order setting out precisely the documentation that is required by Ms. Laurin in order to complete disclosure. [ 100 ] The application for a contempt citation with respect to para 6 of Order #3 is adjourned sine die . I reserve jurisdiction to deal with this application further should the need arise. [ 101 ] Mr.

Paterson, by September 9, 2011, is to provide a report and evidence to the court on the status of the “ disposition ” of the 1984 Nanchang CJ-6A Aircraft and a 1973 Yak 18 - T aircraft and the deposit. [ 102 ] If Ms. Laurin then wishes to pursue the contempt application in terms of Mr. Paterson ’ s possible breach of Order #1 or Order #3 in relation to these planes, she is to bring the matter before me for disposition before the end of September 2011.

[ 103 ] In conclusion, I cannot emphasize too strongly that Mr. Paterson ’ s corporate shenanigans, undertaken to thwart judicial process, will not be tolerated by this court. Heard on the 17 th day of June, 2011. Dated at the City of Edmonton, Alberta this 19 th day of August, 2011. S.J. Greckol J.C.Q.B.A. Appearances: Tina Huizinga Barr Picard for the Applicant Dale E. Tumbach for the Respondent