Chehade v. Chehade, 2011 ABQB 538

Court of Queen ’ s Bench of Alberta Citation: Chehade v. Chehade, 2011 ABQB 538 Date: 20110901 Docket: 4801 135421 Registry: Calgary Between: Anne Elizabeth Chehade Plaintiff - and - Samir Ahmad Chehade Defendant _______________________________________________________ Reasons for Decision of the Honourable Mr. Justice P.R. Jeffrey _______________________________________________________ [ 1 ] Anne Elizabeth Chehade asks the Court to find Samir Ahmad Chehade in civil contempt.

She alleges 54 acts in contempt of two orders of this Court. [ 2 ] This application was advanced, along with 5 others, near the outset of case management of 3 related actions, in a matrimonial action in which Divorce Act and Matrimonial Property Act relief are claimed. The Respondent advanced 6 cross-applications. Only the civil contempt application is dealt with in these reasons. Background Facts

[ 3 ] The parties married in August 1992 and separated in October 2007. [ 4 ] Together they own all the shares in a company called “ Ballast Inc. ” ; one of the parties has caused Ballast Inc. to sue the other, which is one of the related actions. [ 5 ] There are two children of the marriage, daughters aged 14 and 11. [ 6 ] On March 7, 2008, the Applicant was granted exclusive possession of the matrimonial home. [ 7 ] Less than a week later, on March 13, 2008, an Interim Consent Order was rendered by this Court (the “ First Order ” ). It includes the following terms relevant to this application: 2.

Except as otherwise provided in this Order or as agreed to between the parties in writing, pending further Order of the Court, neither party shall:

a) dispose of their assets, including but not restricted to investments and savings or corporate interests; or

b) draw on any line of credit or incur debt secured against any matrimonial asset; or

c) loan or gift matrimonial funds or assets. 3. The Defendant shall cause the Plaintiff to be reinstated as an officer and director of BALLAST Inc. no later than Friday March 14, 2008 and shall not remove her without the Plaintiff ’ s consent or further Order of this Court. 4. That the net sale proceeds of real property presently listed for sale and civically described as Units 3209 and 3309, 60 Panatella Street N.W., Calgary, registered to BALLAST Inc., shall be paid into the trust account of the Defendant ’ s solicitors Daunais Boyes. 5.

The Defendant shall pay into his solicitor ’ s trust account any tax refund he has received or will receive for 2006. 6. The monthly repayment of the parties ’ shareholders loan to Action Door, in the approximate amount of $4,167 shall be applied directly to the credit of the parties ’ two TD Canada Trust Lines of Credit, No. 3274449 and No. 3284541. Any residual interest payment not so covered shall be paid by the Plaintiff.

These funds will be accounted for in the final division of property between the parties or they shall be applied towards any payment of retroactive or ongoing child or spousal support which may be determined appropriate. 7. Any dividend payments which the parties receive or are eligible to receive by virtue of their interest in Action Door Ltd., shall be paid into the Defendant's solicitor ’ s trust account. 8. The Plaintiff shall repay $130,000 of the $230,000 which she withdrew from the parties ’ TD Canada Trust LOC 3213559 to the credit of that account. 9.

The Plaintiff shall retain $100,000 of the $230,000 which she withdrew from the parties ’ TD Canada Trust LOC 3213559 and be at liberty to use these proceeds to support herself and the children and pay costs associated with these proceedings. These funds will be accounted for in the final division of property between the parties or they shall be applied towards any payment of retroactive or ongoing child or spousal support which may be determined appropriate.

10. The Plaintiff shall retain the monies which she transferred into her personal account from the parties ’ joint account on or about February 1, 2008 in the approximately [ sic ] amount of $43,112 (including the $17,000 on deposit to be applied towards the children ’ s school tuition) and be at liberty to use these proceeds to support herself and the children and pay costs associated with these proceedings.

These funds will be accounted for in the final division of property between the parties or they shall be applied towards any payment of retroactive or ongoing child or spousal support which may be determined appropriate. 11. The Defendant shall retain the $86,000 U.S. presently on deposit in Lebanon and be at liberty to use these proceeds to support himself and the children and pay costs associated with these proceedings.

These funds will be accounted for in the final division of property between the parties or they shall be applied towards any payment of retroactive or ongoing child or spousal support which may be determined appropriate. 12.The Defendant shall retain the residue of monies which he has in his personal bank account in the approximate amount of $37,391 as at March 10, 2008 to support himself and the children and pay costs associated with these proceedings.

These funds will be accounted for in the final division of property between the parties or they shall be applied towards any payment of retroactive or ongoing child or spousal support which may be determined appropriate. 13.The Defendant shall be responsible for paying the interest charges associated with the outstanding Cottage Line of Credit (TD Canada Trust LOC 3213559) as well as the interest charges associated with the outstanding Ballast Inc. Lines of Credit TD Canada Trust LOC 5223210 and 5225078).

These funds will be accounted for in the final division of property between the parties or they shall be applied towards any payment of retroactive or ongoing child or spousal support which may be determined appropriate. 14.Any amounts paid or repaid by a third party on account of the parties ’ personal loan in relation to the Crystal Blue Development Ltd. venture shall be applied firstly directly to the parties ’ Ballast Inc. bank accounts and/or lines of credit, and secondly shall be paid into the Defendant's solicitor's trust account. 15.The Defendant ’ s shares in Crystal Blue Development Ltd. and Action Door Services

(1997) Ltd. are matrimonial property and the Plaintiff is entitled to 50 percent of them. The Defendant shall not use, sell or charge these shares or otherwise deal with them without the express written consent of the Plaintiff or a Court Order. [ 8 ] The parties proceeded to private mediation in June 2008. Around that time the Respondent received a lump sum payment of retroactive disability benefits.

He voluntarily transferred over half of that payment to the Applicant. [ 9 ] Also around that time the Respondent learned that the money the parties received monthly from their investment in Action Door Ltd. (that according to para 6 of the First Order was to be applied directly to two of the parties ’ lines of credit) unexpectedly ceased. He continued paying those specified amounts against the lines of credit from his own resources for two months.

Then he informed the Applicant that she would now have to make the line of credit payments from her resources, since in his view it was her responsibility under the First Order. He believed she should have used the lump sum the First Order allowed her to retain for future needs.

She did not make the payments after the expected source of the funds (from Action Door Ltd.) had dried up, or seek the Respondent ’ s consent to a variation of this part of the First Order or ask the Court to vary it. [ 10 ] Sometime in the fall of 2008 the mediation process concluded without resolution. [ 11 ] The Applicant successfully sought a further order from this Court on December 5, 2008, on an ex parte basis (the “ Second Order ” ).

The Second Order required TD Canada Trust (the “ Bank ” ) to produce information about four bank accounts (a lines of credit account secured by their home, a line of credit account secured by their cabin, a Ballast Inc. line of credit account and the Respondent ’ s personal account) and also to “ freeze ” them, such that no further activity would be permitted in them. [ 12 ] These are the two Orders that the Applicant alleges the Respondent breached, thus putting him in contempt of court. [ 13 ] Despite the Respondent ’ s later protestations about the Applicant ’ s conduct culminating in the Second Order and, he says, the adverse effect this freezing of bank accounts had on his ability to comply with the First Order, it appears that at no time did he return to Court to ask that the First Order be reversed or varied.

He did, however, proceed on more than one occasion to access at least one of the accounts the Bank was to freeze, despite the court ordered restrictions on the Bank.

[ 14 ] The Applicant ’ s 54 allegations of contempt are entangled in a complex web of transactions. Funds were shuffled from account to account, to at times minimize interest paid on the various lines of credit, but also at times in order to get access to the desired amounts in the face of the restrictions on the funds arising from the two Orders and other actions of the Applicant in the ongoing litigation. [ 15 ] Each party perceives the conduct of the other through the filter of their deeply entrenched mutual mistrust. Each characterizes the conduct of the other as demonstrating sinister intent.

I make no finding in that regard here and should not be taken as having concluded that the theories of either have been hereby borne out. I am not saying that one or the other of them, or both, may not be correct in their theories of the game afoot by the other. But in the context of this application for civil contempt, advanced entirely on affidavit evidence, documents disclosed and written responses to interrogatories, in the absence of any testing of evidence by cross- examination, I am not making findings determinative such of issues of fact.

They are best left for trial. [ 16 ] In respect of the evidence, two trends surface. The first trend is that everything the Respondent does, including transactions with family, friends and business colleagues, is interpreted by the Applicant to be designed to destroy her matrimonial property. Her theory, which may or may not be true, makes her skeptical of, it seems, every single transaction. She imputes malicious motive to both the Respondent and everyone he transacts with.

She swears in her various affidavits, for example, in no particular order: I do not believe any documents existed and that they were simply fabricated to be put in an Affidavit. [ referring to more recent revelations by the Respondent that an asset in his name was held in trust for his mother, that she held the equitable interest and the Respondent only the legal interest ] I believe that [the Respondent] fabricated documents, back dating them, particularly a Trust Agreement and other documents, such as the Loan Agreement ... justifying the $70,000 lien to avoid the tax implications...

I believe it was Ali Jomaa [ a friend of the Respondent and local lawyer, who was also for a short time a debtor to the Respondent - one of the transactions impugned by the Applicant ] who altered the Minute Books creating resolutions allowing the [Respondent] to compel the TD Bank to ... Mr. Lacourciere [ another local lawyer ], at a later time, purported to act as the corporate solicitor for Ballast Inc. ...He also subsequently staged shareholders ’ meetings which I have suggested were improperly constituted and conducted.

I allege that the [Respondent] fabricated trust documents to support the sale. [ regarding the sale of a condominium by Ballast Inc.

To the Respondent ’ s brother and sister-in-law ] ... this is simply another in the series of untruths that [the Respondent] and his family have embarked upon to defeat my matrimonial property interest. [ referring to the Respondent alleging debts owed to a brother for assistance received from that brother while in university between 1984 and 1988 ] [ elsewhere in her affidavits the Applicant says of that alleged arrangement: ] ... in his February 25, 2009 affidavit where he first fabricated this commitment ...

I do not believe that the Respondent Samir is beyond fabricating documentation to support whatever story he is proffering to the Court to suit his purpose. It is either a consorted [ sic ] action on behalf of the [Respondent] to cause my capitulation with these unwarranted financial tactics or alternatively [he] suffers from some sort of malady that precludes him from obeying Court Orders ... The multitude of applications all brought by the [Respondent ’ s] family [ referring to the inter-related actions ], are simply with a view to practicing litigation terrorism and intimidating me into capitulating ...

[17] The second trend is the Respondent’s demonstrated difficulty accepting that he cannot continue as he did with the familyfinances now that matrimonial property litigation is underway. He justifies and rationalizes transaction after transaction after the fact, butoffered in evidence not a single occasion in which he sought in advance the consent of the Applicant or the Court.

Surely if these varioustransactions and decisions were all so clearly sensible and financially prudent, consent would have been readily forthcoming – if not fromthe Applicant then at least from the Court with the Applicant bearing the cost consequences of unreasonably withholding consent. [18] Instead he reciprocally imputes sinister motives to the Applicant.

His affidavit evidence, in addition to rationalizing eachquestionable action, says (again in no particular order): ... this is again the [Applicant’s] way to exercise control over my life after our marriage ended ... ... the [Applicant] filed two complaints ... against ... two local lawyers with the Alberta Law Society ... for no reason other than to bullythem. I believe it was the [Applicant’s] intention in the first place to put me in [a very difficult financial position] ... I have not been engaged in “intentional financial abuse” as claimed by the [Applicant] ... It is actually quite the opposite... .

The[Applicant] has repeatedly taken actions to exercise full financial control over me ... She told [the Bank for Ballast Inc.] that I am responsible for misappropriating company money and stealing the money for personal use.... She has sabotaged the company and have been holding it hostage ... The [Applicant] committed blatant bullying and intimidating actions against ... our ... accountant... The [Applicant] then proceeded with a full-out character bashing campaign against me ...

The [Applicant] used her “victim” approach to secure an ex parte judgment freezing all my personal and our company’s bank accounts,as a gesture of bullying and part of her efforts to cripple me financially and otherwise. [19] Against this backdrop, in which each side asks the Court to infer very different conclusions from the same set ofcircumstances, the Applicant asks the Court to find the Respondent in civil contempt. Law [20] The following cases were cited to me by the Applicant: Capital Estate Planning Corp. v. Lynch, 2004 ABQB 727, 366 A.R.39; Dreco Energy Services Ltd. v.

Wenzel, 2005 ABCA 185, 371 A.R. 11; Michel v. Lafrentz, 1998 ABCA 231; Point on the BowDevelopment Ltd. v. William Kelly & Sons Plumbing Contractors Ltd., 2006 ABQB 775, 405 A.R. 1, aff’d 2007 ABCA 204, 417 A.R.191; S.W. v. K.T., 2005 ABQB 298; and Broda v. Broda, 2004 ABCA 72, 346 A.R. 372. [21] The following cases were cited to me by the Respondent: Oullette v. Fitz, 2007 ABQB 694, 45 R.F.L. (6th) 171; Filipovic v.Glusica (1995), 1995 ABCA 430 , 174 A.R. 356 (Alta. C.A.); Director of Assessment v. Begg et al. (1988), (NS CA), 85 N.S.R. (2d) 304 (N.S.S.C.A.D.). [22] Justice Sulyma’s

summary of civil contempt law, in Capital Estate Planning Corp., supra, offers a useful starting point. Shewrites as follows (citations omitted):

19 A party who disregards or fails to do something ordered to be done in a civil order or judgment commits civil contempt:... 20 Contempt is a serious remedy and should only be invoked in the most extreme circumstance: ... Contempt is quasi-criminal in nature: ...

As a result, the constituent elements must be proven beyond a reasonable doubt:... 21 A contempt order is considered to be a final order and should not be based on hearsay evidence: ... especially in contempt proceedings, material facts in dispute should not be resolved by a choice between conflicting affidavits:... 22 Injunctions and restraining orders must be clear and unambiguous in order to find contempt: ... 24 If the order said to be breached is ambiguous, “ the alleged contemnor is entitled to the most favourable construction ” : ... 26 ... both the letter and the spirit of an injunction must be obeyed.

Following the “ spirit ” of an injunction means that the party cannot thwart the order by doing

an act that is not specifically mentioned in the order but is clearly intended to be prohibited by the order. ... 27 ... contempt of court extends past a breach of a specific term in the order if the actions are done to obstruct justice by thwarting or attempting to thwart the order. However ... the act committed must be ‘ clearly covered by the prohibition ’ and not just contrary to the spirit of the order. ... 30 Mens rea is not a requirement of civil contempt. It is not necessary to show that the defendant was intentionally contumacious or that he intended to interfere with the administration of justice.

However, the party alleging the contempt does have to establish that the other party had knowledge of the order and could have complied with it: ... [ 23 ] Cromwell, J.A., as he then was, in TG Industries Ltd. v. Williams , 2001 NSCA 105 , 196 N.S.R. (2d) 35 , puts that last point this way, at para. 17: The core elements of civil contempt are knowledge of the order and the intentional commission of

an act which is in fact prohibited by it. The required intention relates to the act itself, not to the disobedience; in other words, the intention to disobey, in the sense of desiring or knowingly choosing to disobey the order, is not an essential element of civil contempt. [ 24 ] In his discussion of that point, Cromwell, J.A. cites with approval the following from Stancomb v.

Trowbridge Urban District Council , [1910] 2 Ch. 190 , at 194 : ... it is no answer to say that the act was not contumacious in the sense that, in doing it, there was no direct intention to disobey the order. [ 25 ] The Alberta Court of Appeal put it this way in Michel v. Lafrentz , 1998 ABCA 231 , 219 A.R. 192 at paras 21 and 24 : 21 It must not be thought that contempt of court always requires an intent to disobey the court, or even an intent to do

an act which is in fact forbidden. When someone is ordered by the court to do something, he or she must use a sufficient degree of diligence to perform, or to have the act performed: ... 24 ... An order of a court to do

an act requires reasonable care in the doing of the act personally, or in delegating the matter to suitable responsible persons, and then checking to see that it has been carried out in a prompt and proper fashion.

Alleged Incidents of Civil Contempt [ 26 ] The Applicant acknowledges that some of the Respondent ’ s alleged breaches are “ minor ” , by which I understand her to mean only that they involve smaller amounts of money. She expresses concern about all the alleged breaches, but in the context of her overriding concern that the Respondent ’ s contumacious conduct has thwarted all her efforts to preserve the matrimonial property under the Respondent ’ s control. She wants to avoid there being no matrimonial property left for division later after her claim for her share of it is heard.

She says that “ the most flagrant breaches are for amounts that are in excess of $200,000. ” [ 27 ] For ease of reference in addressing the various alleged acts of civil contempt, I shall refer to them by using the same numbering, 1 to 54, ascribed to them by the Applicant in her

summary chart. [ 28 ] Before proceeding through that exercise, I will first comment on the Respondent ’ s various general responses to the Application.

The Respondent says that: 1. the Applicant herself “ initially and repeatedly breached ” the same orders of this Court, and not just in respect of the financial items as he is alleged to have done, but also with the children by poisoning their relationship with their father and withholding access to the children as the Court ordered, as leverage for performance of other expectations; 2. he had understood that “ the legal process was no longer being used ” since the parties were engaged in a consensual mediation process; 3. factors outside his control (a bank freezing assets of a company owned jointly by the parties) prevented his performance of various acts; 4. many of the alleged breaches were fulfilling commitments made prior to separation that the Applicant was both aware and supportive of; 5. the Applicant previously applied to have the Respondent cited in contempt and then never pursued the application; 6. the Applicant has not met the onus of proof for a finding of civil contempt; and 7. in any event, contempt is not the appropriate remedy here.

He says that the Applicant has alternate recourse – she can have the Court consider any dissipation of matrimonial assets when it divides the matrimonial property. [ 29 ] Regarding the Respondent ’ s point #1, even if true this does not absolve the Respondent from his obligations to abide by orders of this Court. I have not turned my mind to whether the Applicant should be cited in civil contempt; no such application is before me. [ 30 ] But I do not ignore these arguments.

The Respondent raises these cross-allegations of the Applicant ’ s contempt also as evidence in support of his position that once into the mediation process both parties ignored the requirements of the First Order and tried together to manage each financial issue afresh as it arose.

I will say more below (in respect of the Respondent ’ s point #2) about the merits of his claim that the mediation process obviated his need to comply with the terms of the Orders, but in any event I am satisfied that, for at least the time around the start of the mediation, the Respondent has adduced sufficient uncontraverted evidence of his voluntary payments, his transactions to advantage their combined matrimonial property, and his understanding of the scope and status of the Orders that the contempt claim is sufficiently negatived. That is, I find applicable to some of the alleged incidents of civil contempt

the words of Fraser, C.J.A., as summarized by Sulyma, J. in Capital Estate , supra at para 21, that: ... especially in contempt proceedings, material facts in dispute should not be resolved by a choice between conflicting affidavits. [ 31 ] In fact, many of the claimed incidents of civil contempt fail on this ground of conflicting affidavit evidence, conflicts unable to be resolved by reference to the remainder of the Court record.

These are discussed in more detail below. [ 32 ] Regarding the Respondent ’ s point #2, his belief that the terms they accepted upon entering their mediation process replaced the First Order, in his December 6, 2010 Affidavit, for example, he says: The [Applicant] and I had executed a new agreement with Fairway Divorce which terms, to my understanding, replaced [the First Order] ... [ 33 ] He implies that he thought he was no longer obliged to abide by the terms of the First Order and that any actual breaches during that time were unintentional; he did not intend to disobey the First Order. [ 34 ] First, this is irrelevant to whether he acted in civil contempt since, as indicated above, it is no answer to say he did not intend to disobey an order of the Court: TG Industries , supra .

It would be relevant, however, if proven on balance, to determining the just consequences for any such civil contempt. [ 35 ] Second, this is not supported by the preponderance of evidence. Nothing was presented to show that the Applicant consented to any variation or suspension of the First Order.

The document the Respondent signed upon entering into the mediation process suggests the opposite, saying: Until your Plan is underway or complete, we ask that you not liquidate any assets or negotiate or incur any further debt without the consent of your spouse/partner, and maintain the status quo on spousal support and child support. [ 36 ] If anything it suggests the continuation, not the cessation, of existing financial arrangements between the parties. [ 37 ] Furthermore, the Respondent ’ s view of the First Order being replaced is inconsistent with his earlier sworn testimony.

At Exhibit “ E ” to his February 25, 2009, affidavit he stated: e. June 2008 - as yet another gesture of good faith, as part of our Fairway Agreement, and as a gesture of good faith, I volunteered to pay the [Applicant] an additional $5,000 monthly to cover hers and the children ’ s expenses, so that ... ( underlining added) [ 38 ] If the agreed terms of the mediation replaced the First Order as the Respondent now says he believed at the time, then the Respondent would not have referred to the $5,000 monthly as “ additional ” .

That is, if the First Order had been replaced there would be nothing the $5,000 payments would have been “ additional ” to. But perhaps he might say he was volunteering at the time to pay both the amounts set out in the First Order and the $5000 and that, therefore, the voluntary “ additional ” $5,000 was additional to other voluntary payments of the amounts previously ordered. If that were true, then in this affidavit he would have drawn attention to his even larger “ gesture of good faith. ” He would have underscored that the combined sum was volunteered.

The only logical inference to be drawn from this wording of his affidavit, sworn closer to the time of the June 2008 agreement, is that the Respondent did not understand the First Order to have been replaced, supplanted or suspended in any way. [ 39 ] Also, reinforcing that conclusion, the Respondent expected the Applicant to continue to abide by the requirements of the First Order after entering into the mediation process. He wanted her to pay the Lines of Credit as he believed was required of her after the Action Door Ltd. monthly cheques stopped coming in.

In his affidavit evidence as part of his response to his alleged contempt, he points

to what he believes was her failure to comply with the First Order by not paying the lines of credit monthly after Action Door funds were not available to be applied to those debts. At the times he swore those affidavits, therefore, he was not of the view the First Order had been supplanted or suspended by their agreement at the outset of mediation. [ 40 ] Third, and in any event, an order of the Court remains binding until expired, amended, varied, vacated, stayed or overturned on appeal. None of those occurred here. It cannot be replaced by the parties saying so.

They can agree not to enforce it against each other, but not to amend, suspend, supplant, amend, terminate, stay or vacate it. The express wording they agreed to, which was incorporated into the First Order, contemplated that the parties by written agreement (in para 2 of the First Order) could over-ride the prohibitions on their conduct.

No evidence was presented of any attempt by the Respondent to procure the Applicant ’ s written agreement for any of the alleged incidents. [ 41 ] Regarding the Respondent ’ s point #3, if factors beyond his control prevented him from complying with the Orders he will not be found in civil contempt, all other things being equal.

Certainly his conduct before the associated breach, if he could foresee the uncontrollable extraneous influences about to prevent him from complying, and after the breach, to attempt to remedy the situation, will bear on the analysis of whether a finding of civil contempt is still warranted. [ 42 ] Regarding the Respondent ’ s point #4, that for some of the alleged incidents of civil contempt he was merely fulfilling prior commitments (commitments made before the First Order was rendered) and that the Applicant knew about them too so should not now feign surprise or complain, in his decision in Point on the Bow Development Ltd. v.

William Kelly & Sons Plumbing Contractors Ltd. , 2006 ABQB 775 , Rooke, J., as he then was, concluded with comments of more general application, which included: 115 ... (5) a party that finds itself unable to comply with an order or direction of the Court must act in advance to seek relief or must comply; [ 43 ] There is no evidence that the Respondent made any effort to seek the Applicant ’ s prior consent or, failing that, a relaxation from the Court about any of his acts which the Applicant alleges constitute civil contempt.

He says the Applicant was aware of these from her active involvement in the actual decisions leading to them and from her active involvement in the parties ’ financial record keeping. If that is a reasonable conclusion to reach (awareness on her part), then it is also reasonable to conclude that the Respondent was similarly aware when the wording of the First Order (an “ Interim Consent Order ” ) was being negotiated between the parties. Express exceptions could have been made or perhaps deferrals negotiated with the individual counter-parties.

If he forgot to mention all of them at that time then, as the associated actions approached that would place him in breach of the First Order, he should have acted in advance to seek relief. He did not. Paragraph 2 of the First Order expressly contemplated this possibility. [ 44 ] The Respondent explains why he never sought advance relief in one instance (his sale to his brother of his Jaguar vehicle – which the Applicant says was sold at below fair market value).

The Respondent stated “ I didn ’ t want to file a court application that would cost me another $10,000 to sell a $12,000 vehicle. ” He says nothing of approaching the Applicant for her consent.

If he had and she refused, resulting in the continued depreciation of the vehicle, at trial he could argue with probable success that the value lost would all be to her account, or he could have asked for the Court ’ s approval of the sale and for his legal costs of the process to be paid by the Applicant. [ 45 ] Regarding the Respondent ’ s point #5, that the Applicant earlier applied to find the Respondent in civil contempt, the Applicant says that considerable time passed as a consequence of both the changes of counsel for the parties and the Court requiring all questioning to proceed in this case by written interrogatories rather than face to face examinations.

While this may explain the delay, or explain it in part, it nevertheless can weaken the claim: Oullete v. Fitz , supra , at para. 31. Also, as Rooke, J. further observed in Point on the Bow : 115 ... (11) parties in case managed proceedings can and should resolve issues either as they arise or at the next case management meeting rather than saving them up for a future contempt battle. [ 46 ] Here they were advanced at the inaugural case management meeting, along with the other 11 applications between the parties. Nothing has been presented to me to show that res judicata or issue estoppel applies.

The delays do not preclude the Applicant from now advancing her application.

[47] Regarding the Respondent’s point #6, whether the requisite onus of proof has been satisfied by the Applicant will beaddressed in respect of each of the individual allegations. [48] Regarding the Respondent’s pint #7, the argument that contempt is not the appropriate remedy in view of the Applicant beingable to have any resulting dissipation of assets remedied at the ultimate disposition of the matrimonial property issues, if that were truethere would be no point in the Court issuing the Orders in the first place.

Upon any request for the Court’s assistance by order inpreserving matrimonial assets the Court’s response would simply be: “request denied; deal with any dissipation of matrimonial propertyat trial and, if proven, good luck recovering against assets that have since been dissipated.” [49] It is true that contempt is not the only tool to manage litigation. The Alberta Court of Appeal in Oil Sands Energy HoldingsInc. v. Golosky Holdings GP Inc., 2010 ABCA 396, at para 49 stated: ... chambers judges, and especially case management judges, need power to manage litigation, and to enforce their orders.

But contemptis far from the only method open to them. [50] It is also true that relief is available for any such dissipation, regardless of whether the dissipation was also the result ofconduct in breach of a court order. But those truths do not entitle a party to breach an order of the court in respect of that matrimonialproperty. A dissipation ruling is in the context of the parties’ just and equitable shares of divisible matrimonial property, whereas acontempt ruling deals with disregard for the authority of the Court and, by extension, the Rule of Law.

Civil contempt is not condoned;the effective management of the litigation process often necessitates that contempt be addressed immediately and firmly, in any event ofthe cause. [51] I will turn, then, to the various individual incidents alleged to constitute civil contempt. Loans to Friends [52] Items 1 and 25 involve loans the Respondent made to friends, one for $10,000 to a Mr. Drinkwater and another for $15,000to a Mr. Ayoub Khalil. The Respondent admits these transactions but says they were not prohibited by the First Order since the fundscame from his personal bank account.

He says the First Order only prohibited dealing with matrimonial property. While it is true thatpara 2(

c) of the First Order prohibits loans only of “matrimonial assets,” para 2(

a) more broadly prohibits disposition of their assets. [53] In Burge v. Burge (1994), (SK KB), 127 Sask. R. 48 (Q.B.), appeal on other grounds dismissed: (1995), (SK CA), 134 Sask. R. 72 (C.A.), an order prevented a husband from disposing of matrimonial property without hiswife’s consent. The Court found the husband guilty of civil contempt for using a $100,000 deposit certificate as collateral for a loan to afriend by a third party. The husband argued that he did not “get rid of” the deposit certificate by offering it up as security.

The Courtdisagreed, finding that he had transferred control over it, in effect disposing of it so that it was no longer available to divide with the wife.The loan had gone into default and the third party creditor had appropriated the certificate. [54] The Respondent says Mr. Drinkwater has since repaid the loan and Mr.

Khalil is doing likewise over time. “All this money isaccounted for,” says the Respondent. [55] The loans of this magnitude, in my view, should not have been made without the Applicant’s consent, but the Applicant hasnot proven beyond a reasonable doubt that they were made from matrimonial assets and thus these incidents do not constitute civilcontempt. Sale of Shares

[ 56 ] Items 2 and 3 refer to the alleged sale of shares in Saxon Energy Services Inc. for the sum of $469 in August 2008. An entry to that effect appears on the TD Waterhouse account statement of the Respondent. In August 2009, some 16 months later, he transferred $470 into another of his personal accounts at the Bank, one that had not been frozen by Court Order. The Respondent had no recollection of the sale transaction, suspecting the company may have folded.

TD Waterhouse refers to the matter as a “ disposition. ” The Respondent had readily admitted many other of the impugned transactions, suggesting that there is no reason not to believe him here when he says he has no recollection of the disposition and that it likely occurred without his direction instruction. This is sufficient in the circumstances to negative the allegation of civil contempt in respect of these shares. [ 57 ] Item 32 alleges civil contempt in respect of the Respondent ’ s sale on January 29, 2010 of 320 shares in i2 stock, held within a Smith Barney investment account, for $4064.00.

It appears these shares may have been acquired during or as a consequence of employment the Respondent once held with i2. The Respondent says that i2 was purchased “ by JDA software ” and that, to his knowledge, “ the company stock has not traded since mid 2009 ” . The Applicant offers nothing further. On the basis of inconsistent and indeterminate affidavit evidence such as this, civil contempt has not been proven beyond a reasonable doubt.

Failures to pay amounts ordered [ 58 ] Items numbered 4, 16 - 18, 34 - 44 and 47 - 54 warrant no further comment than this: they allege that the Respondent failed to pay monies that this Court ordered him to pay and Rule 10.52(3)(a)(

i) says:

(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 [ emphasis added ] [ 59 ] In so finding I am mindful of the very narrow scope the Supreme Court of Canada has given the phrase “ the payment of money ” within the equivalent Ontario rule in the family law context: Dickie v. Dickie , 2007 SCC 8 , [2007] 1 S.C.R. 346 .

If not for that narrow scope, even more of the breaches alleged here also could not be considered for a finding of civil contempt. [ 60 ] The evidence proffered in respect of these alleged breaches may be relevant to various issues in the larger litigation, and perhaps to the related actions, but the alleged breaches cannot in and of themselves constitute civil contempt. Alleging these 23 separate incidents to be civil contempt served no useful purpose.

Transactions involving the joint line of credit account with Marwan [ 61 ] Items 5 , 6, 7, 10 , 22 and 23 relate to funds (totaling well over $60,000) removed from an account in the Respondent ’ s name (#4513068) between September 15, 2008 and January 27, 2009. Extensive detail has been provided documenting these withdrawals and, in most cases, tracing the destinations of the funds. One of the sums was returned 3 days after its withdrawal.

The Respondent does not deny the withdrawals. [ 62 ] The Respondent says, however, that this line of credit account is his brother Marwan ’ s, not the Respondent ’ s, and is secured by Marwan ’ s home. The account is jointly in both Marwan ’ s and the Respondent ’ s names, he says, because he holds title to part of Marwan ’ s home in trust for their mother and so the lender required it.

The funds withdrawn, purportedly with Marwan ’ s consent, represent loans from Marwan to the Respondent that the Respondent expects to repay once the matrimonial litigation resolves. [ 63 ] Like many of the explanations offered by the Respondent to the Applicant ’ s allegations, the Applicant claims it is recently fabricated. She asserts, among other things, that the purported trust arrangement had never been mentioned before separation. The Respondent maintains that it was and that the Applicant was supportive.

And so, again, on the conflicting affidavits I have more than a reasonable doubt that the withdrawals were from matrimonial funds and contrary to the First Order. Civil contempt disputes should not be resolved by choosing between competing narratives in conflicting affidavits and shall not be in this case, no matter how strongly held

may be the Applicant ’ s theories about the ulterior games being played by the Respondent. Allegations of civil contempt must be proven by more than inferences urged upon the Court from affidavit evidence in the face of competing affidavit explanations of the events. [ 64 ] Items 20 and 21 each involve the transfer of $250 from one of the two separate accounts the parties opened for their children, into Marwan ’ s account.

The Applicant has not proven beyond a reasonable doubt that these accounts are matrimonial property as opposed to, for example, trust accounts holding their children ’ s money, such that access to the funds is not prohibited by the First Order. These claims of civil contempt also fail. Minimizing interest expenses [ 65 ] Item 8 alleges that on September 22, 2008 the Respondent transferred $47,120.77 from the line of credit secured by the cabin to a Ballast Inc. account.

The Respondent readily acknowledges having done so and explains, first, that he did so during the mediation process with full disclosure to the Applicant and the mediator, without objection, and, second, that he did so to reduce the higher interest bearing line of credit for Ballast Inc. in favour of the lower interest bearing line of credit secured by the cabin.

It appears that both parties will benefit from this step, leaving aside the differing tax treatments of Ballast Inc. expenses and their personal expenses. [ 66 ] For the reasons earlier stated regarding events during the mediation process, even though on its face this is a direct breach of para 2(

b) of the First Order, I am not satisfied beyond a reasonable doubt that the Respondent is guilty of civil contempt in respect of this particular breach. In my view it also would not be just to grant the Applicant ’ s application to hold the Respondent in civil contempt when it appears, from the affidavit evidence before me, that the Applicant was complicit in the transaction. [ 67 ] Item 9 similarly was admitted by the Respondent and explained as an attempt to replace higher interest debt with lower, for their mutual benefit and all during the mediation, and with the apparent acquiescence of the Applicant.

A finding of civil contempt is not warranted here. Retrieving overpayments [ 68 ] Items 11 and 12 also involve admitted withdrawals by the Respondent from accounts secured by matrimonial assets. In that sense they represent breaches of para 2(

b) of the First Order. However, the Respondent explains, and the Applicant offers nothing to contest the explanation, that these two withdrawals represent the amount of overpayment made by the Respondent when he deposited $5,000 into each account to cover the servicing costs that were no longer being paid from out of the Action Door receipts. [ 69 ] In the circumstances, again, of conflicting affidavit evidence, I am not prepared to find the Respondent in civil contempt.

Furthermore, it has not been proven beyond a reasonable doubt here that the Respondent acted in civil contempt when, instead of ascertaining in advance the precise amount required to be paid, he deposited a lump sum certain to cover the obligation (of both parties) and then withdrew the excess after the fact. [ 70 ] It would have been far preferable for the Respondent to have procured the Applicant ’ s consent to these practices prior, or to have been more accurate from the outset in his interest payments, but his approach does not constitute civil contempt.

Repayment of a pre-existing debt [ 71 ] Items 13, 14 and 15 are tied to item 19, which involves the remittance of $118,000 to a friend and business colleague in San Antonio, Texas, Mr. Ali Khalil, on December 2, 2008. The Respondent admits sending the funds. He says that, with the knowledge of the Applicant, he committed to an investment in Texas on behalf of Ballast Inc. in September of 2007, before the parties separated and more than 6 months before the First Order. The Texas friend covered for him and granted him time to pay because of the separation, but called for the funds a year later.

[ 72 ] The Respondent has produced a letter, unsworn, purporting to be signed by Khalil, confirming that the Respondent “ had committed to invest money in one of our projects to the order of $118,000 USD. We went ahead and made financial commitments based on his commitment. By the end of November 2008, I reminded Mr. Chehade of his commitment.

He obliged by sending me the original amount the first week of December. ” The Applicant again claims this is all a contrived recent fabrication, the Respondent conspiring with a friend to reduce the amount of matrimonial property she can recover. [ 73 ] The funds were sent from the Respondent ’ s personal account but were assembled there from the Ballast line of credit (Item 14 - $49,000), the matrimonial home line of credit (Item 15 - $4,000) and the Buffalo Lake cabin line of credit (Item 13 - $70,000).

Regardless of whether they were honouring a commitment made on behalf of Ballast Inc., as the Respondent now says, or was in his personal capacity, as Mr. Khalil seems to indicate, to make this payment the Respondent breached clause 2(

b) of the First Order by drawing on the lines of credit secured against matrimonial assets (Items 13 and 15). [ 74 ] It is no answer to the allegation of civil contempt to say these clear breaches were justified because they were to satisfy a pre- Order commitment. As discussed above, if this large commitment did in fact originate in September 2007 as the Respondent claims, it could have been expressly addressed when the parties negotiated the terms of the First Order.

Failing that, the First Order excepts from the prohibition anything agreed between the parties in writing or exempted by further order of the Court. Neither was attempted by the Respondent. [ 75 ] I find the Respondent in civil contempt of the First Order in respect of items 13 and 15. Sale of Jaguar [ 76 ] Item 24 alleges that on February 7, 2009, the Respondent sold his 2003 Jaguar vehicle, a matrimonial asset to his brother contrary to the First Order and for $12,000 less than its fair market value of $17,000. The First Order prohibited him from selling his matrimonial assets.

The Applicant ’ s evidence of fair market value is the Respondent ’ s earlier sworn statement that the asset was worth $17,000. [ 77 ] The Respondent says it was a depreciating asset, was not practical and needed repair. He says the sale price was not below fair market value. He chose to sell it rather than retain it so that a greater value could be realized for it. He said in an earlier affidavit that he received $1,000 cash and a cheque for the remaining $11,000, which he continued to hold awaiting directions from the Court on where the money should go.

However it does not appear that he ever requested any such directions from the Court as to the appropriate use of those funds. [ 78 ] More recently he says his motivation was to lease a replacement vehicle more suitable for transporting his two children. [ 79 ] By the time of this “ sale ” the mediation had ended and it had to be obvious to the Respondent that the Applicant was vigilant about wanting her share of the matrimonial property; she was challenging most transactions. He characterized her approach as trying to financially control him.

Why, then, he would so blatantly dispose of a matrimonial asset without any attempt whatsoever to secure her consent is mystifying. He perhaps assumed her opposition so never tried, but if so he did that to his peril. This breach of the First Order was intentional, was admitted by the Respondent, and I find that it also constituted civil contempt. New debt [ 80 ] Item 26 alleges a new debt to the Respondent ’ s brother Marwan, on February 17, 2009, in the sum of $142,007.50, secured against matrimonial assets, contrary to clause 2(

b) of the First Order. [ 81 ] The Respondent acknowledges the debt and says that it represents the series of amounts that he borrowed from his brother (or from his brother ’ s line of credit) from October 2007 to January 2009. His brother came to him asking for a promissory note reflecting the amounts borrowed.

[ 82 ] If the interest in Marwan ’ s home is not, as the Respondent claims, held in trust by the Respondent for his mother but is actually the parties ’ , then he has breached the First Order by drawing on a line of credit secured against a matrimonial asset. The Applicant says the Respondent conspired with his brother to recently fabricate this trust arrangement. The Applicant ’ s theory is denied by the Respondent with a plausible alternate explanation and a corroborating document (though self-serving).

They cannot both be right, but in contempt applications, as the Applicant ’ s own case law made clear, credibility is not to be determined on conflicting affidavits. [ 83 ] There remains therefore more than a reasonable doubt as to whether the First Order has been breached; this allegation of civil contempt fails. Removing funds from frozen bank accounts [ 84 ] Regarding items numbered 27 - 30 and 33, the Respondent is not technically in contempt of court since the Second Order does not require anything of him or prohibit him from doing anything. It is directed at the Bank.

The Applicant has presented evidence impugning the Bank for seemingly permitting account activity after being ordered not to, but this is not an application against the Bank and the Bank has not been given opportunity to present additional evidence or otherwise respond to these allegations. [ 85 ] However it might be argued that the Respondent is in contempt of the spirit of the Second Order by initiating transactions that the Bank, seemingly in breach of the Second Order, processed.

As previously noted, paragraph 26 of the Capital Estate decision says in respect of the terms of an injunction: ... both the letter and the spirit of an injunction must be obeyed. Following the “ spirit ” of an injunction means that the party cannot thwart the order by doing

an act that is not specifically mentioned in the order but is clearly intended to be prohibited by the order. [ 86 ] Regarding these items, the Respondent acknowledges removing at separate times the sums of $1,081.41, $477.44, $996.13, $996.45 and $1245.71 from his personal account that the Second Order told the Bank to freeze, saying as explanation: “ The account was unfrozen by the Bank and I needed the money. I always believed that there was a certain period for freezing a bank account that needs to be renewed.

I did not do so to intentionally breach the court order. ” [ 87 ] Regarding incident 33, he offered the same explanation but noted the funds this time went from his personal account to service the (joint) line of credit on the matrimonial home. [ 88 ] The fact remains, however, that the Respondent was not prohibited by Court order from removing these sums from his personal account, or transferring one of them over to the line of credit secured against the matrimonial home. Further, the Bank permitted these transactions, from which the Respondent inferred the transactions were not offside the Orders.

Civil contempt on his

part is not proven in these circumstances. Removing personal items from the cabin [ 89 ] Item 31, removing the Applicant ’ s personal belongings from the cabin, to which the Respondent admitted, is not contrary to any Order referred to me. An earlier Order (granting exclusive possession of the matrimonial home to the Applicant) required the Applicant to turn over to the Respondent certain personal effects, but no order was referred to me regarding the Respondent being required to deliver up any of the Applicant ’ s personal effects, or their boat, insured in the Respondent ’ s name or otherwise.

There was no basis for the Applicant to suggest that this act constituted civil contempt. It should not have been advanced for the Respondent to answer and this Court to consider. Crystal Blue and the Jomaa Receivable

[ 90 ] Items 45 and 46 are connected. [ 91 ] Item 45 alleges that the Respondent breached the First Order when he borrowed from a Mr.

Abou-Merhi, between November 2008 and August 2009, the aggregate sum of $228,180, secured by matrimonial assets. [ 92 ] The Respondent acknowledges borrowing the funds and has produced a document notarized in Quebec which purports to bear the signatures of both the Respondent and Abou-Merhi and which refers to a Promissory Note signed the same day by the Respondent in favour of Abou-Merhi for that amount (the actual Promissory Note does not appear to have been presented in evidence).

But the Respondent says that the debt was not secured by any matrimonial assets. [ 93 ] Nothing in the notarized document suggests any security was pledged for the loans. No evidence has been presented to show this to be secured against matrimonial assets. The Applicant ’ s allegation is not substantiated by any evidence. It is therefore not proven beyond a reasonable doubt that the Respondent breached one of the Orders when borrowing from Mr.

Abou-Merhi. [ 94 ] But the Respondent says that shortly after the signing of the acknowledgment of indebtedness, Abou-Merhi called on the Respondent to repay the $228,180, because of an unexpected need for the funds. That is where it connects with item 46. [ 95 ] Item 46 relates to a loan the Respondent made to his friend and lawyer, a Mr. Ali Jomaa, for $200,000, at the time they were raising investment capital for their “ Crystal Blue ” venture, a real estate development project near MacGregor Lake, Alberta.

The Respondent says he had committed to invest $1,800,000 in the venture but, because of the divorce litigation and the Applicant locking up their funds, he told Jomaa he had to pull back on his commitment level. They involved some 40 family and friends to assemble the funds required, but remained $200,000 short when the time came to close the last of their land purchases for the project.

The Respondent felt a sense of obligation to somehow provide that remainder and so they decided that the Respondent would loan it to Jomaa personally at an agreed rate of interest, knowing the funds would be deployed by Jomaa to complete the land purchases for Crystal Blue.

He did so in February 2008, prior to either of the Orders, drawing on two Ballast Inc. lines of credit (for $140,000) and his brother Marwan ’ s line of credit (for $65,000) to do so. [ 96 ] The allegation of contempt numbered 46 is not for sourcing the funds as he did or for loaning them to Jomaa, but for the Respondent later “ selling ” (as the Applicant puts it) the loan. [ 97 ] The First Order addressed this loan to Jomaa as follows: 14.

Any amounts paid or repaid by a third party on account of the parties ’ personal loan in relation to the Crystal Blue Development Ltd. venture shall be applied firstly and directly to the parties ’ Ballast Inc. bank accounts and/or lines of credit, and secondly shall be paid into the Defendant ’ s solicitor ’ s trust account. [ 98 ] The First Order also prohibited, at clause 2(a), either party from disposing of their assets, including but not limited to investments. [ 99 ] When Abou-Merhi called for funds the Respondent could not repay the debt.

The Respondent communicated with Jomaa and authorized him as follows: November 17, 2009 Attention: Ali Jomaa

This document is to acknowledge to you, that: 1. At my request, please forward the sum of $100,000.00 to Mazen Abou Merhi 2. I feel responsible for the financial bind that Mazen is in, because he has lent me to this date a substantial amount of money (about $230,000) which I have been unable to repay, or even fully service the agreed upon monthly interest, as I originally anticipated and agreed to 3. In the event that Mazen does not repay the funds you lent him, I agree to indemnify you for such amount that is not repaid 4.

You shall also be entitled to offset any unpaid amount owed to you by Mazen against funds which you owe me 5. I personally guarantee any loans you advance to Mazen up to a maximum of $230,000, plus interest at a rate of 8%. 6. You have advised me and strongly urged me to obtain independent legal advice in this matter. (Signature) Samir Chehade [ 100 ] By clause 4 thereof, the Respondent authorized the use of matrimonial property (the Jomaa receivable) to satisfy his personal debt to Abou-Merhi. [ 101 ] The Respondent says that Jomaa then loaned Abou-Merhi $100,000 twice, between November 2009 and February 2010.

The Applicant began demanding that the Respondent call Jomaa for payment of the $200,000 loan but, the Respondent says, Jomaa ’ s money had now been loaned to Abou-Merhi. The Respondent says Abou-Merhi suggested “ he sells his debt to [Jomaa] for simplicity purposes ... . They executed a debt transfer agreement ... . As such, [Jomaa] bought my debt from [Abou-Merhi] with the money [Abou-Merhi] owed him. And now, I still owe [Jomaa] the difference. ” [ 102 ] The net effect of all this saw clause 14 of the First Order circumvented and clause 2(

a) breached. The Jomaa receivable, which was matrimonial property – the majority of the loaned funds having been secured by matrimonial property, has been disposed of to retire the majority of a personal debt of the Respondent. This conversion of the receivable was not unlike the circumstances in Burge , supra . Here the acts were intentional, were not beyond the Respondent ’ s control, and were contumacious. I find the Respondent in civil contempt in respect of item 46. Conclusion [ 103 ] The Respondent has been found in civil contempt in respect of items 13, 15, 24 and 46, as described above.

Unless the parties agree on the appropriate consequences for the contempt and costs, these must be spoken to and addressed at a future attendance of these parties in Case Management, the booking of which must occur before the end of September 2011. When considering appropriate consequences for the acts of civil contempt, the Court obviously will consider and weigh favourably any purging of the contempt that occurs prior to that hearing. [ 104 ] No less than one week prior to the parties ’ return to speak to the issues of consequences and costs, they are to each submit and exchange a brief

summary of their position on the matter, with any case authorities attached and properly highlighted. The brief may be in bullet point form and should not exceed two pages in length. Heard on the 7 th day of January, the 23 rd to 25 th day of March, the 3 rd , 7 th and 16 th day of June, 2011.

Dated at the City of Calgary, Alberta this 1 st day of September, 2011. P.R. Jeffrey J.C.Q.B.A. Appearances: Jay Damen Arkell Damen Hoffman for thePlaintiff Glenda Graham Macleod Dixon LLP for the Defendant