Beaver Hills Holdings Limited v. Greenstreet Development Corp., 2013 ABQB 203

Court of Queen ’ s Bench of Alberta Citation: Beaver Hills Holdings Limited v.

Greenstreet Development Corp., 2013 ABQB 203 Date: 20130404 Docket: 1103 17601 Registry: Edmonton Between: Beaver Hills Holdings Limited and Peter Garry Applicants - and - Greenstreet Development Corp., Ten Peaks Development Trust by Its Trustee Ten Peaks Capital Corp., and Ten Peaks Capital Trust by its Trustees Robin Auld, Richard Melchin and John Bachynski Respondents Corrected judgment: A corrigendum was issued on April 16, 2013; the corrections have been made to the text and the corrigendum is appended to this judgment. _______________________________________________________ Memorandum of Decision of the Honourable Madam Justice J.M.

Ross _______________________________________________________

[ 1 ] The Plaintiffs apply to have the Respondents Richard Melchin and the Defendants held in civil contempt for failing to obey a Court Order and Appointments requiring his attendance to be questioned in aid of the Plaintiffs ’ judgment and for failing to provide financial reports verified by Statutory Declaration. [ 2 ] The chronology of events is: a. August 20, 2012: Memorandum of Decision granting the Plaintiffs

summary judgment is released; b. September 19, 2012: Formal Judgment granted and filed; c. November 2, 2012: Appointment for Questioning in Aid of Enforcement of Richard Melchin on November 28, 2012 served on counsel; d. November 19, 2012: Defendants ’ counsel advised Mr. Melchin would not attend on November 28, 2012; e. December 6, 2012: Order for solicitor and client costs of the action granted and filed; f. December 11, 2012: Order that Richard Melchin attend for questioning in aid of enforcement no later than January 15, 2013 granted (filed January 8, 2013); g.

December 14, 18 and 26, 2012: Plaintiffs ’ counsel writes to Defendants ’ counsel suggesting January 4 or 7, 2013 for questioning; h. January 4, 2013: Plaintiffs ’ counsel writes to Defendants ’ counsel advising that an Appointment for Questioning of Richard Melchin would be issued for January 11, 2013; i. January 8, 2013: Appointment served on counsel; j. January 11, 2013: Richard Melchin failed to attend to be questioned; k. January 11, 2013: Telephone conference with the Court resulting in direction that Mr. Melchin attend for questioning on January 15, 2013; l.

January 11, 2013: Appointment served on counsel; m. January 15, 2013: Mr. Melchin failed to attend to be questioned; n. January 30, 2013: Plaintiffs ’ counsel served Defendants through counsel with demands for sworn financial statements. [ 3 ] The required financial statements have now been returned, although not within the 15 day period provided in the Civil Enforcement Regulation AR 276/1995 s 35.10(4). [ 4 ] At the hearing of this application on February 26, 2013, with the agreement of the Defendants, the Court directed that Mr.

Melchin attend for Questioning in Aid of Enforcement on March 21, 2013. [ 5 ] The Plaintiffs submit that they have complied with the procedural and substantive requirements of this application. Mr. Melchin was personally served with notice of the application. They have established that Mr. Melchin and the Defendants have failed to comply with the December 11, 2012 Order and with the Civil Enforcement Regulation , and he has failed to provide a reasonable excuse. He should be declared to be in civil contempt.

As steps have now been taken to provide for compliance, the only remedy sought is an order for solicitor and client costs for the enforcement proceedings leading to and including this application. [ 6 ] Under Rule 10.52 of the Alberta Rules of Court a person who fails, without reasonable excuse, to comply with an order of the court to attend questioning, may be declared to be in civil contempt. [ 7 ] Under s 35.17 of the Civil Enforcement Regulation , if a person who is required to provide a financial report or submit to questioning fails to do so, he may be held to be in civil contempt.

By analogy to Rule 10.52, a failure for which the person has a reasonable excuse would not constitute civil contempt.

[ 8 ] The Defendants filed the affidavit of a legal assistant dated January 25, 2013, stating that on January 15, 2013 she was advised by counsel for the Defendants that “ he had spoken with our client Richard Melchin that morning and that our client was unable to attend his Questioning of Aid and Enforcement [sic] that day due to illness. ” The affidavit attached a copy of a doctor ’ s note dated January 15, 2013, stating that Richard Melchin was ill and unable to attend any meetings on January 15 or 16, 2013. [ 9 ] The Defendants raise three arguments in response to the Plaintiffs ’ claims. [ 10 ] First, as to any failures other than attendance on January 15 th , counsel for the Defendants submits that this was due to delays or issues associated with the opening of his office, and that, therefore, any relief to be awarded should be awarded against counsel. [ 11 ] There is no application for relief against counsel personally, so I need not consider this.

Counsel ’ s actions or inactions do not excuse the person who is required to comply with a court order or who is subject to the Civil Enforcement Regulation .

As stated in Point on the Bow Development Ltd. v William Kelly & sons Plumbing Contractors Ltd. , 2006 ABQB 775 at para 115 : “ too much work for counsel is not an adequate excuse for failure to be timely in litigation - the answer is to get more help or have other counsel appointed. ” On the other hand, counsel ’ s involvement may affect the appropriate penalty. “ The penalty for a finding of contempt should always be proportionate to the personal responsibility of the person in contempt and to the seriousness of the contempt ” : Koerner v Capital Health Authority , 2010 ABQB 557 at para 42 , citing Petty v Johnson , 2001 ABQB 280 at para 4 , and Jervis v Nendze , 2002 ABQB 673 at para 28 . [ 12 ] Second, regarding Mr.

Melchin ’ s failure to attend for questioning on November 28, 2012 or January 11, 2013, the Defendants argue that any finding of contempt is precluded by the December 11, 2012 Order. This Order provided for questioning to take place “ no later than ” January 15, 2013. The Defendants argue that the Order overtakes any previous incident of civil contempt (i.e., the failure to appear on November 28, 2012), and further prevents Mr.

Melchin from being held in civil contempt for failing to appear for questioning on any date prior to the ordered date of January 15, 2013. [ 13 ] The December 11, 2012 Order does not indicate that any decision was made regarding civil contempt in relation to Mr. Melchin ’ s failure to attend for questioning on November 28, 2012. While I would not find that the Order in itself precludes a finding of contempt for previous conduct, the information before me does not satisfy me that the failure to attend on this first occasion constituted civil contempt.

The Defendants ’ counsel advised the Plaintiffs ’ counsel in advance that Mr. Melchin would not be attending and further that the Defendants would be seeking a stay of the Plaintiffs ’ judgment. The stay application was heard with the Plaintiffs ’ application to enforce Mr. Melchin ’ s attendance. The application for a stay may have been a reasonable excuse for Mr.

Melchin ’ s failure to appear on November 28, 2012; there is an indication that the Plaintiffs treated it as such, as it does not appear that a certificate of non-attendance was obtained. [ 14 ] The December 11, 2012 Order did not provide a specific date for Mr. Melchin ’ s questioning; it provided only that this should take place “ no later than ” January 15, 2013.

The Order does not exclude the application of the Civil Enforcement Regulation , other than to provide that, while the questioning can take place at either Calgary or Edmonton, conduct money for the attendance is to be paid on the basis that the questioning is to be conducted in Calgary. There is nothing in the Order that indicates that an appointment served in accordance with the Regulation for a date earlier than January 15, 2013 would not be effective.

The evidence is that, after letters attempting to arrange questioning on January 4 or 7, 2013 went unanswered, Plaintiffs ’ counsel served an appointment for January 11, 2013. The Defendants were advised of this on January 4, 2013 and the appointment was served on January 8, 2013. The Defendants ’ counsel responded on January 9, 2013 that Mr. Melchin was unavailable due to his mother ’ s 90 th birthday party and requested that the date of the Appointment be changed to January 15 or 16, 2013. The Plaintiffs obtained a certificate of non-attendance when Mr.

Melchin failed to appear on January 11, 2013. [ 15 ] While the December 11, 2012 Order does not preclude a finding of contempt for the failure to attend on January 11, 2013, I decline to find that this failure constituted civil contempt. His mother ’ s 90 th birthday party, combined with an agreement to attend for questioning four days later, is in my view a reasonable excuse for Mr. Melchin failing to attend on January 11 th .

It was unfortunate that this arrangement was not made until January 9 th , but this is understandable given that the appointment was not served on the Defendants ’ counsel until January 8 th . I note as well that the service of the appointment did not provide the required 5 days notice stipulated in s. 35.11(2) of the Civil Enforcement Regulation , and on this ground, as well, I would decline to find that Mr. Melchin ’ s failure to attend on January 11, 2013 constituted civil contempt.

[ 16 ] As to Mr. Melchin ’ s failure to attend for questioning on January 15, 2013, the Defendants argue that his illness, as evidenced by his doctor ’ s note, is a reasonable excuse. The Plaintiffs respond that the evidence provided does not establish a reasonable excuse, as it is in the form of an affidavit of a paralegal containing double hearsay, rather than an Affidavit sworn by someone with personal knowledge, either Mr.

Melchin or his physician. [ 17 ] The Alberta Court of Appeal has determined that a motion to cite for contempt of court “ should be considered as a final order (and not an interlocutory order) and should not be based upon hearsay evidence ” : Kulyk v Wigmore , 1987 ABCA 127 , at para 3 . While the Court was referring to evidence of the applicant in support of the application, I see no reason why the same standard would not apply to the respondent seeking to rely on a reasonable excuse for his failure to comply with a court order. From his perspective as well, the application is for a final order.

Further, the evidence provided in this case was not only hearsay, but lacks any semblance of reliability or necessity. The deponent had no involvement with or knowledge of the facts deposed to, and had not even spoken directly to the source of the hearsay. There was also an obvious and readily available source of better evidence, namely Mr. Melchin himself. The affidavit was not sworn until January 25, 2013 and there is no suggestion that Mr.

Melchin was not recovered and able to provide his own affidavit by that time. [ 18 ] I decline to rely on the affidavit of the legal assistant, and therefore find that the Defendants have not established a reasonable excuse for the failure to attend for questioning on January 15, 2013. Mr. Melchin and the Defendants are declared to be in civil contempt. [ 19 ] As to the penalty that is sought, the Defendants argue that Mr. Melchin is not a personal defendant in the suit, but was sued as a trustee. Costs are only available against a trustee in limited circumstances. [ 20 ] I reject this argument. Mr.

Melchin is not declared to be in civil contempt for actions taken in his capacity as a trustee, but for his actions as an individual. He was personally ordered to attend to be questioned, both as a party and as a representative of the corporate defendant. His failure to attend was a failure to comply with his personal obligation to comply with a court order. [ 21 ] The Plaintiffs seek an order for solicitor and client costs against Richard Melchin and the Defendants, jointly and severally. While I have found that Mr. Melchin is in civil contempt, that finding is tempered by a number of considerations.

I have not found contempt in relation to Mr. Melchin ’ s failures to appear before January 15, 2013. I am mindful that counsel has accepted responsibility for delays in this matter and I would also place responsibility on counsel for the improper form of evidence provided on this application. The penalty for contempt should be proportionate to the personal responsibility of the person in contempt and to the seriousness of the contempt: Koerner v Capital Health Authority , at para 42 , and cases cited therein.

An appropriate penalty in view of all of these circumstances is not solicitor and client costs, but a heightened costs award. [ 22 ] Mr. Melchin and the Defendants are ordered to pay double taxable costs on the appropriate column for enforcement steps up to and including this application. Heard on the 26 th day of February, 2013. Dated at the City of Edmonton, Alberta this 4th day of April, 2013. J.M. Ross J.C.Q.B.A. Appearances:

Mr. Jeremy H. Hockin Parlee McLaws LLP for the Plaintiffs/Appellants Mr. Robert B. White, Q.C. Robert B. White Q.C. and Company for the Defendants/Respondents _______________________________________________________ Corrigendum of the Memorandum of Decision of The Honourable Madam Justice J.M. Ross _______________________________________________________ The date on the front page has an extra number “ 9 ” . It should read as follows: 20130404.