Schitthelm v Kelemen, 2013 ABQB 42

Court of Queen ’ s Bench of Alberta Citation: Schitthelm v Kelemen, 2013 ABQB 42 Date: 20130129 Docket: 1201 06948 Registry: Calgary Between: Gary Schitthelm Plaintiff / Respondent - and - Louis J Kelemen Defendant / Applicant _______________________________________________________ Memorandum of Decision of the Honourable Mr. Justice K.D. Yamauchi _______________________________________________________ I. Introduction [ 1 ] This matter arises out of a dispute between two equal shareholders of a corporation.

The parties had executed a unanimous shareholder agreement (“USA”) that was, in part, intended to assist them in resolving any disputes. [ 2 ] A dispute arose, and the parties have not been able to resolve it. Louis J. Kelemen (“Kelemen”) has applied to this Court asking that it find Gary Schitthelm (“Schitthelm”) in contempt for not complying with a court order that a chambers judge granted on July 27, 2012 (the “Order”).

[ 3 ] Kelemen asks this Court to rule immediately on Schitthelm’s alleged contempt. Schitthelm argues that this Court must first outline the procedure that a court must employ when it considers whether a person has committed contempt, including any steps a court must employ to protect his rights. In other words, he asks this Court not to make a finding of contempt, at this stage, but merely to give procedural guidance for how the contempt hearing will proceed.

Inasmuch as the parties did not provide this Court with any evidence concerning Schitthelm’s alleged contempt, other than a bare allegation that he did not comply with the Order, this Court believes it would be worthwhile to provide the parties with guidance on how they should proceed with the contempt proceeding. II. Salient Facts [ 4 ] In late 2008, Kelemen sought Schitthelm’s assistance to turn around the financial situation of a corporation in which Kelemen carried on his business. By March 2009, the parties had agreed that each of them would hold an equal number of the corporation’s voting shares.

They entered into a USA. As well, each of them entered into an executive employment agreement with the corporation. Schitthelm became the corporation’s president and chief executive officer, while Kelemen became the corporation’s executive vice-president and chief operating officer. [ 5 ] In late 2011, the parties disagreed on a number of management issues and were not able to resolve their disagreements. As a result, Kelemen exercised his rights that are contained in the “shotgun” provisions outlined in the USA. He served an “Offeror's Notice” on Schitthelm pursuant to USA

Article 2, titled “Compulsory Buyout.” In the Offeror’s Notice, Kelemen offered to sell all of his shares to Schitthelm for $90,000. Within the time limit set forth in the USA, Schitthelm responded to Kelemen’s offer by serving an “Offeree's Notice” on Kelemen, thereby agreeing to buy Kelemen’s shares pursuant to the USA’s compulsory buyout provisions. [ 6 ] In January 2012, pursuant to the USA, the closing date for Schitthelm’s purchase of Kelemen’s shares was extended to May 30, 2012. Schitthelm scheduled the closing meeting for 10:00 a.m. on May 30, 2012.

On that date, Schitthelm tendered the purchase price of $90,000, interest on the purchase price in the amount of $886.24, calculated by the corporation’s banker in accordance with USA

Article 2.5, and $340,000, which was payment in full of the shareholder's loan that the corporation owed to Kelemen. Kelemen did not attend the closing meeting despite being invited to do so. [ 7 ] USA

Article 9.6 grants a power of attorney in favor of Schitthelm to complete any documents required to close the sale and purchase of Kelemen’s shares. As Kelemen’s attorney, Schitthelm completed the documents necessary to close the sale and purchase. [ 8 ] On June 1, 2012, Schitthelm commenced an action against Kelemen. On June 20, 2012, Kent J granted Kelemen's application for an interim injunction (the “Kent Order”).

The Kent Order sought to preserve the status quo pending a hearing of the balance of Kelemen’s application, which included issues about the status of the USA and whether the court would deal with issues concerning alleged oppression against Kelemen. Among other things, the Kent Order directed that Kelemen shall have access to the corporation’s books and records and that the corporation obtain Kelemen’s approval for all expenditures over $25,000, except the monthly rent payment. [ 9 ] Through the Order, the chambers judge confirmed aspects of the Kent Order.

In addition, the Order specifically directed Schitthelm to, among other things, cause the corporation to repay Kelemen’s shareholder’s loan and provide Kelemen access to the corporation’s books and records. III. Contempt A. Background [ 10 ] Rules 10.52 and 10.53 of the Alberta Rules of Court , Alta Reg 124/2010 [ Rules ] provide:

Declaration of civil contempt 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. Punishment for civil contempt of Court 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. [ 11 ] The reason for the Order is clear. In the opening words to paragraph 1 it says: Pending determination of the above-referenced action at trial and in an effort to maintain the status quo between the parties before the Shotgun Agreement was closed ... In other words, the Order was intended, as much as possible, to maintain the parties’ situation as at the moment before they exercised the shotgun provisions contained in the USA.

Of course, the business of the corporation had to be carried on, so the Order contains some prohibitions and reporting requirements to facilitate that end. [ 12 ] Kelemen did not make clear to this Court the aspects of the Order that Schitthelm allegedly breached or continues to breach.

It appeared, from his argument, that he is alleging that Schitthelm breached the following provisions, which this Court will articulate verbatim from the Order (inserting the names of the parties in square brackets): 1.5 [Schitthelm] shall allow [Kelemen] access to an office at [the corporation], equivalent to the one he occupied before May 30, 2012, and to [the corporation’s] facilities only during normal business hours, including telephone and email access. 1.6 [Kelemen] shall have access to the [corporation’s] books and records but without interference with the business operations of [the corporation]; 1.9 [Schitthelm] shall cause [the corporation] to provide [Kelemen] with the same salary and benefits that [Kelemen] had been receiving from [the corporation] prior to May 30, 2012, including salary amounts for the period from June 1, 2012 to July 25, 2012, with the understanding that [Kelemen’s] acceptance of said salary is without prejudice to any claim he may have for unpaid wages.

As well, in his application, Kelemen specifically alleged the breach of the following order:

1.10 Mr. Schitthelm will cause the [corporation] to repay Mr. Kelemen’s shareholder loan pending and after seeking any consent required by [the corporation’s] Bank + do so in keeping with the U.S.A. This Court assumes that the chambers judge intended the “+” symbol to be equivalent to the word “and.” Neither party appealed the Order or its terms. [ 13 ] In his written brief, Kelemen argues that, at least with respect to the Order para 1.10: The terms of the Orders are clear; Mr.

Schitthelm is clearly aware of the terms of the Orders - he was present in Court on the last occasion and has commented on them in his affidavit; and Mr. Schitthelm has acknowledged that he has not repaid the shareholder loan. [ 14 ] Schitthelm, replying in his brief, claims the protection of the Canadian Charter of Rights and Freedoms,

Part I of the Constitution Act, 1982 , being

Schedule B to the Canada Act 1982 (UK), 1982, c 11 [ Charter ]. Schitthelm claims rights to a full and fair hearing, natural justice, protection from being compelled to testify, and not to be found in contempt unless Kelemen proves the alleged contempt beyond a reasonable doubt. He eschews “any form of

summary procedure.” Schitthelm claims “[c]ontempt of court is an exceedingly complex legal issue” and finds it remarkable that “some alleged contemnors admit their contempt”. [ 15 ] Schitthelm acknowledges that “[t]he alleged contempt in this case is, presumably, disregard for a mandatory injunction.” He argues that mandatory injunctions are rare and that “[p]roving breach of mandatory injunctions is much more complex” than proving the breach of a prohibitive injunction.

Schitthelm suggests that “[p]roof of the ‘ actus reus ’ in the case of a mandatory injunction makes no sense as the injunction requires that something be done” and that “[m]ere proof that the thing has not been done is not sufficient to prove contempt” as “[t]he alleged contemnor does not have to prove his innocence, only offer justification once the contempt has been proved beyond a reasonable doubt.” [ 16 ] Schitthelm sums up his position by stating “[i]t is extremely unlikely that [Kelemen] could ever make out the case for contempt” then retrieves a sword and suggests that “[i]n the appropriate case, a groundless application for contempt could be actionable in a suit for malicious prosecution.” Although a brief is meant to be argument for the benefit of the court, Schitthelm warns Kelemen that failure to prove contempt beyond a reasonable doubt “may attract substantial liability.” [ 17 ] Why does the Order para 1.10 refer to the corporation’s bank?

The parties had agreed with the corporation’s bank to postpone their shareholder loans in favour of debts the corporation owes to its bank. That contract remains extant. Schitthelm argues that the payment of Kelemen’s shareholder loan would be a breach of the parties’ agreement with the corporation’s bank. However, this Court finds that the Order specifically contained the proviso that the repayment would only occur “pending and after seeking any consent required by [the corporation’s] Bank” to protect the parties and the corporation from this possibility.

Schitthelm also argues that the repayment of Kelemen’s shareholder’s loan would be a breach of the USA; that is the very issue that is before the court, of which the Order directed a trial. [ 18 ] With that background, it is appropriate to consider the procedural rights engaged in this contempt application and the interaction of the Charter with the common law offence of contempt of court. B. The Nature of the Contempt Power [ 19 ] Superior courts have the inherent jurisdiction to control the proceedings before them.

For a court to operate effectively, it requires an ability to maintain order in its proceedings and ensure its directions are followed. This is part of the rule of law.

[20] Courts have differentiated between contempt of a civil nature and contempt of a criminal nature: see e.g. Poje v BritishColumbia (Attorney General), (SCC), [1953] 1 SCR 516 at 517 [Poje]; United Nurses of Alberta v Alberta (AttorneyGeneral), (SCC), [1992] 1 SCR 901 at 931 [United Nurses]; Chiang (Trustee of) v Chiang, 2009 ONCA 3 at para 10,93 OR (3d) 483 and Seaward v Paterson, [1897] 1 Ch 545 at 555-56, 559.

However, in Vidéotron Ltée v Industries Microlec ProductsÉlectioniques Inc, (SCC), [1992] 2 SCR 1065 at 1075 [Vidéotron], Gonthier J warns that “too great an insistence on thedistinction between civil contempt and criminal contempt” could mask characteristics common to all types of contempt. In Pro SwingInc v Elta Golf Inc, 2006 SCC 52 at para 34, [2006] 2 SCR 612 [Pro Swing], the Supreme Court of Canada states that the decision inVidéotron set “aside the distinction between the civil and criminal aspects” of contempt law. Why is this?

As mentioned in R v Cohn(1984), (ON CA), 48 OR (2d) 65 at para 11 [Cohn]: ... the [Criminal] Code does not specifically provide for or define any such offence nor does it set forth any procedure for the prosecutionof such offence or any penalty following conviction therefor. Resort must be had to the common law for these matters. Contempt of courtis a common law offence. Thus, contempt, whether of a criminal or civil nature derives from the same source, the common law.

Certainly, the context in whicheach occurs might differ, and the results that flow from each might inform whether the contempt is “civil” or “criminal.” However, asnoted in Halsbury’s Laws of England, vol 22, 5th ed (London, UK: LexisNexis, 2012) at para 2, footnote 1 [citations omitted], “[t]heclassification of contempts as criminal or civil has become progressively less important and has been described as ‘unhelpful and almostmeaningless’ in the present day”. [21] Vidéotron and Pro Swing indicate that contempt should not be looked at as merely “civil” or “criminal” in nature, because allcontempt has a public aspect and is of a “quasi-criminal nature”: Pro Swing at para 36. [22] While courts have held that civil contempt is generally coercive in nature and criminal contempt punitive in nature, this Courtis not convinced that the procedural rights that attach to contempt proceedings and the Charter’s applicability to them change merelybecause of the way in which one classifies the contempt.

In all cases, courts must examine the particular facts before them and determinethe procedures that natural justice and the Charter require. C. Charter Applicability [23] The Charter is engaged when a person’s liberty is at risk: see e.g. Re BC Motor Vehicle Act, (SCC), [1985] 2SCR 486. In a contempt application, a person’s liberty may be at risk: Rules rr 10.53(1)(a)-(c). Is the Charter engaged when a personfaces a finding that they are in civil contempt pursuant to the Rules? [24] Certain provisions of the Charter might be engaged in the matter before this Court, including: 7.

Everyone has the right to life, liberty and security of the person and the right not to be deprived thereof except in accordance with theprinciples of fundamental justice. ... 9. Everyone has the right not to be arbitrarily detained or imprisoned. ...

11. Any person charged with an offence has the right (

a) to be informed without unreasonable delay of the specific offence; (

b) to be tried within a reasonable time; (

c) not to be compelled to be a witness in proceedings against that person in respect of the offence; (

d) to be presumed innocent until proven guilty according to law in a fair and public hearing by an independent and impartial tribunal; ... 12. Everyone has the right not to be subjected to any cruel and unusual treatment or punishment. [25] Has a person who is alleged to have committed civil contempt been “charged” with anything? In Cohn at 75-76, the OntarioCourt of Appeal said: The heading which precedes s. 11 of the Charter reads: “Proceedings in criminal and penal matters”.

The portion of s. 11 whichdetermines in the first instance the persons who may derive the benefit thereof is the first line which states: “Any person charged with anoffence has the right ...”. The heading to s. 11 makes it clear that s. 11 of the Charter applies to an offence although it may not be, strictlyspeaking, a criminal matter. It is sufficient if it is a penal matter. Even if contempt proceedings are not properly characterized as criminalmatters, there can be no doubt that they must, at the very least, be characterized as penal matters.

The word “penal” as used in theheading undoubtedly bears the dictionary meaning “of, pertaining to or relating to punishment”. It is the power to punish for contempt ofcourt which is expressly preserved by s. 8 of the Criminal Code and, as previously stated, I am of the view that the citation for contemptof court constitutes the charging of an offence within the meaning of s. 11. It follows, therefore, that s. 11(

c) and (

d) of the Charter areapplicable to contempt of court proceedings. [26] While one might think that, in a civil matter, the party making the application to have the court find the other party in civilcontempt simply wants to have the court order enforced for its benefit, there can be no doubt that Rules rr 10.53(1)(

b) and 10.53(1)(c)are penal in nature. The spectre of that punishment alone makes the Rules that govern civil contempt subject to the Charter, or at leastsome of its provisions. See e.g. R v Winter (1986), 1986 ABCA 173 , 72 AR 164 at para 9 [Winter], where the Alberta Court ofAppeal chose not to follow a decision of the Québec Superior Court in Attorney-General of Quebec v Laurendeau (1982), (QC CS), 3 CCC (3d) 250, which held that a person cited for contempt was not “charged” with an offence within the meaning ofCharter s 11. In Placentia-St.

Mary’s Roman Catholic School Board v Newfoundland Association of Public Employees, Local 5802(1986), 60 Nfld & PEIR 350 at para 4 (Nfld SC (TD)), Steele J said “[t]he penalty for contempt of court may involve a fine or committalto jail and is therefore a punishment affecting the liberty of the person.

Consequently contempt proceedings may have definite overtonesof a criminal nature.” At paragraph 5, Steele J went on to quote, with agreement, the following passage from Nigel Lowe & Sir GordonBorrie, Borrie & Lowe’s Law of Contempt, 2nd ed (London, UK: Butterworths, 1983) at 393, where the authors said: Although this aspect of contempt is designated civil, because of the penal sanctions, it has been said to 'partake of a criminal nature' andmany of the rules that normally apply when seeking to prove an accused guilty of a crime, apply when seeking to show that thedefendant has committed civil contempt.

It also means that the rules safeguarding contemners' [sic] rights must be strictly complied with. [Footnotes omitted.] [27] Even if one concedes that Charter rights are engaged, does this provide a complete answer to the question concerning theprocedures a court must use in contempt proceedings? The Charter itself comes with built-in limits. Charter s 7 provides that every rightcontained in that

section is subject to restrictions that are in accordance with the principles of fundamental justice. As well, everyCharter right can be limited by engaging Charter s 1, which provides for “such reasonable limits prescribed by law as can bedemonstrably justified in a free and democratic society.” Indeed, in Winter at para 12, the Alberta Court of Appeal found the instanterprocedure which the trial judge used to find the accused in contempt was justified under Charter s 1.

[28] In a civil contempt proceeding, the court may not discard the alleged contemnor’s rights. The court must, however, carefullybalance those rights against those of the party who alleges that the alleged contemnor has committed civil contempt. Above all, when acourt considers the procedural requirements that are engaged in a civil contempt proceeding, it must ensure that the alleged contemnor isnot found to have committed contempt without adequate proof of culpability.

This informs all aspects of contempt procedure. [29] The procedure required to address the competing interests in contempt applications will not always remain constant; each casedepends on its particular facts. D.

Procedure [30] In R v K(B), (SCC), [1995] 4 SCR 186 at para 11 [K(B)], Lamer CJ said: In order to simplify matters, it is my opinion that we should use the notion of citing in contempt, not as an expression of a finding ofcontempt but instead, as a method of providing the accused with notice that he or she has been contemptuous and will be required toshow cause why they should not be held in contempt. [31] While the cases that deal with criminal contempt are distinguishable from civil contempt under the Rules, they are instructivein assisting the courts in fashioning a procedure to use when considering an allegation of civil contempt.

What emerges from those cases,and what natural justice and the Charter require, is a three-stage procedure: citing the person in contempt of the court, conviction andsentencing.

Under the Rules, those stages are specifically outlined as follows: Citing the person in contempt of the court: Rules rr 10.52(1) and 10.52(2) require the accuser provide the alleged contemnor with noticeof the application for a declaration of civil contempt; Conviction: Rules r 10.52(3) allows the judge to “declare” the alleged contemnor to be in civil contempt; Sentencing: Rules r 10.53 outlines the “penalties” and “sanctions” the judge might impose on the contemnor. [32] Each stage should be separated, unless there is an urgent and imperative reason why the stages should be collapsed so theprocedure can be expedited: R v Arradi, 2003 SCC 23 at para 30, [2003] 1 SCR 280 [Arradi]; Doobay v Diamond, 2012 ONCA 580 atpara 40, leave to appeal to SCC requested.

As well, the Rules provide that a judge may cite and declare the person to be in contemptinstanter in appropriate circumstances: Winter. Those situations do not apply to the case before this Court. [33] Except in the case of a judge using an instanter

summary procedure, this procedure allows, among other things, the allegedcontemnor to receive legal advice and instruct counsel. As well, this procedure provides the accused with an opportunity to purge thecontempt: Braun (Trustee of) v Braun, 2006 ABCA 23 at para 27, 384 AR 80 [Braun]; Rules rr 10.53(3). [34] In Andreachuk, Re (1984), 120 AR 156 at para 15 (CA), the Alberta Court of Appeal held that the judge hearing thecontempt application should not be the same judge who issued the order that the accuser seeks to enforce. The reasons are two-fold.First, it prevents any apprehension of bias from arising.

Second, this procedure prevents the judge from reading past the literal words ofthe order that they granted. A different judge, who has not yet seen the order, is in a better position to interpret it impartially. E.

Citing the Person in Contempt: Notice of Contempt and Disclosure of Evidence [35] The accuser must provide the alleged contemnor with specifics of the allegations of contempt, such that the alleged contemnorunderstands the allegations they face, has an ability to respond to the allegations, and has an opportunity to purge their contempt, if any.If the accuser makes the allegation that the alleged contemnor has breached a court order, the alleged contemnor “must be given anopportunity to provide ‘an adequate excuse’ for his disobedience of a court order”: Metropolitan Life Insurance Co v Hover (1999),1999 ABCA 123 , 237 AR 30 at para 6 (CA) [Hover].

[36] In Cotroni v Quebec Police Commission, (SCC), [1978] 1 SCR 1048 at 1058 [Cotroni], the Supreme Courtof Canada found that where a person was alleged to have committed contempt by providing evasive answers to questions, the accusershould have put the questions that the alleged contemnor failed to answer in the charge.

The court in Freedom Villages Inc v Gander(Town), 2008 NLTD 116 at para 10, 277 Nfld & PEIR 67 [Freedom Villages] states that “the alleged contemnors are entitled to knowprecisely the charges that are made against them and the evidence by which the charges are to be proven”. [37] Consistent with the disclosure requirements in the criminal context, described in R v Stinchcombe, (SCC),[1991] 3 SCR 326 [Stinchcombe], the alleged contemnor is entitled to be provided with disclosure of the evidence related to theallegations of their contempt.

This includes not only that which the accuser intends to rely on, but anything relevant that bears on thealleged contempt itself. This is important as the accuser could be in possession of exculpatory evidence. However, courts must not gettoo carried away by layering the Stinchcombe requirements on every case in which a party is alleged to have committed civil contempt;each case must be decided on its own facts, and the level of disclosure will depend on those facts.

In Vale Inco Ltd v USW, Local 6500,2010 ONSC 3039 at para 7, 320 DLR (4th) 185 (Sup Ct) [Vale Inco], Gordon J said: ... [T]he nature and extent of the disclosure obligations need to be decided on a case by case basis, having regard to such issues as:

(1) The relief being sought by the party bringing the motion for contempt. If the motion is brought essentially for the purpose of endingthe unlawful conduct that is one thing; if the motion is brought with a request for significant penal sanction, that is another thing entirely;

(2) Whether the alleged contempt is ongoing, resulting in an urgent need to preserve order and protect the authority of the court;

(3) If the alleged contempt is not ongoing, whether the relationship between the parties is such that the impugned conduct mightreasonably be expected to resume without timely intervention by the court;

(4) The nature of the conduct alleged; and

(5) The nature and extent of the materials of which disclosure is sought and the time expected to produce it. Gordon J concluded by saying at para 9: It will be important for the court to consider whether the purpose for which disclosure is being sought is legitimate. It will be importantfor the court to consider whether the ends of justice are best met by making the requested order. [38] The accuser must use Rules Form 27 when it seeks to have a court find the alleged contemnor in contempt.

The form asks forparticulars of the grounds for making the application and the evidence on which the accuser intends to rely. [39] The alleged contemnor need not answer any allegation that lacks specificity. The alleged contemnor must be provided with afull opportunity to answer and defend the allegation, or to purge the alleged contempt. However, where one allegation fails for a lack ofspecificity, another, specific, allegation can proceed. F.

Conviction: Elements of Contempt [40] In Koerner v Capital Health Authority, 2011 ABQB 191, 506 AR 113, aff’d 2011 ABCA 289, 515 AR 392, leave to appeal toSCC refused, 34573 (April 26, 2012) at para 43, Shelley J, relying on the decision of Rooke J (as he then was) in Point on the BowDevelopment Ltd v Kelly (William) & Sons Plumbing Contractors Ltd, 2006 ABQB 775, 405 AR 1, establishes the following elements

of civil contempt in a case where the contemptuous behaviour is a breach of a court order: 1. An existing requirement of the court; 2. Notice of the requirement to the alleged contemnor; and, 3. An intentional act (or failure to act) that constitutes a breach of the requirement without adequate excuse. The accuser must prove all elements. [41] For the accuser to prove a breach of an existing requirement in a court order, they must prove the existing requirement. Theactus reus of the breach constitutes the action in breach of the court order or the failure to perform

an act that the court order requires.The mens rea is the alleged contemnor’s intention to commit the prohibited act or the intentional, willful or reckless failure to performthe required act. [42] Authority for the mens rea in mandatory court orders is found in the remarks of Côté JA in Michel v Lafrentz, 1998 ABCA231 at para 21, 219 AR 192, where he says: “[w]here someone is ordered by the court to do something, he or she must use a sufficientdegree of diligence to perform, or to have the act performed”.

This quote is cited with approval by a panel of the Alberta Court of Appealin Broda v Broda, 2004 ABCA 72 at para 7, 346 AR 372. [43] In many cases, a court may infer the mens rea from the contemnor’s actions and the surrounding circumstances, but this is notalways the case. What is important, however, is that the accuser prove the actus reus and the mens rea: Calgary (City) v Chisan (2002),32 MPLR (3d) 256 (Alta QB) [Chisan]. If there is a lack of clarity in the existing requirement, the accuser might fail on one or the otherof these elements.

Later, this Court will discuss the standard of proof that the accuser must meet. [44] The contempt hearing is not the place where the alleged contemnor may attack the correctness of the order. The order isconclusive and binding until an appellate court sets it aside on appeal. In Freedom Villages at para 8, the court said: The order of a superior court is valid and enforceable unless it is lawfully stayed or set aside on appeal. It cannot be disregarded justbecause it is believed to be in error or beyond the powers of the court making the order: Great Eastern Oil & Import Co. v.

Chafe(1961), (SCC), 31 D.L.R. (2d) 153 (S.C.C.). To question the order at the contempt hearing would amount to a disallowed collateral attack on the order: William A Stevenson & JeanE Côté, Alberta Civil Procedure Handbook 2012, vol 1 (Edmonton: Juriliber, 2012) at 9-17. [45] For the accuser to prove contempt, actual knowledge of the existing requirement or order is normally required: Bhatnager vCanada (Minister of Employment and Immigration), (SCC), [1990] 2 SCR 217 at 225 [Bhatnager]. Personal serviceprovides the alleged contemnor with actual knowledge of the order.

As well, the accuser must prove that the alleged contemnor hadproper notice of the contempt motion. Proving personal service of the application or otherwise demonstrating the alleged contemnor’sactual knowledge of the motion is what is required: Hover paras 6-9. [46] The burden of proof rests with the accuser when it is attempting to prove that the alleged contemnor has committed anintentional act (or failure to act) that constitutes a breach of a court order: United Nurses at 933; Synergy Credit Union Ltd v Husch,2008 SKQB 275 at para 29, 319 Sask R 273; Bhatnager at 224; Chisan at para 32.

As a result, the alleged contemnor need not respondto a contempt allegation until the accuser proves all the elements of civil contempt. [47] Because proceedings that involve a determination whether the alleged contemnor has committed contempt are quasi-criminal

in nature, the accuser must prove each element beyond a reasonable doubt: Chisan at para 32; R v Pearson, (SCC),[1992] 3 SCR 665 para 40; Bhatnager at 224; Coleman v Bihis (1997), (AB KB), 210 AR 321 at para 8; In reBramblevale Ltd, [1970] Ch 128 at 137 per Lord Denning. [48] Does uncertainty in the order have an impact on the “prosecution” of a contempt allegation? Uncertainty in the order may, ofitself, give rise to a reasonable doubt. Where there are multiple reasonable

interpretations of an order, or a range of meanings to whichthe order could give rise, the alleged contemnor is entitled to the benefit of the

interpretation that is in their favour: Freedom Villages atpara 99. [49] Of course, there will be circumstances where the ambiguity of an order guts the meaning of an order. Those situations shouldbe rare. Courts aim to draft clear orders, but even where some ambiguity appears, it might be possible to extract some certain meaning,even if it is less than what was intended. In the alternative, the parties could seek clarification from the court.

This was done to clarify aruling of the Alberta Court of Appeal: see Director of Child, Youth and Family Enhancement (Alta) v BM, 2010 ABCA 240 at para 10,482 AR 273[Ouellet 3]. [50] In the Ouellet cases, a single chambers judge of the Court of Appeal found a party in contempt: Alberta (Director, Child,Youth & Family Enhancement Act) v M(B) (2009), 71 RFL (6th) 277 [Ouellet 1]. The contemnor asked that chambers judge to reopenthe finding of contempt, which was denied: Director of Child, Youth and Family Enhancement (Alta) v BM, 2009 ABCA 258, 460 AR188 [Ouellet 2].

In Ouellet 3 a panel of the Court of Appeal overturned the finding of contempt. [51] In Ouellet 1 at para 15 (reproduced in Ouellet 2, Appendix A at transcript page 37 or at page 210 of the Alberta Reports), thesingle chambers judge held that when a court has issued an order, “[i]f there is some doubt as to what the court order means, then stepsmust be taken to clarify the doubt.” The three member panel in Ouellet 3 at para 14 acknowledges this remark, neither adopting nordenouncing it, so the remark is persuasive dictum. [52] In any case, when a mandatory (as opposed to prohibitive) court order is issued, something must be done.

The failure to takeany action, which may include seeking clarification, may be contempt: Ouellet 2 at para 27. [53] Once the accuser has met that burden, the alleged contemnor may respond with evidence to demonstrate justification or torebut evidence that would otherwise lead to a finding of contempt. This is a shift of the evidential burden, not a shift in the burden ofproof. In Cohn at 80-81, the Court said: At its highest, the application of a rule nisi by the presiding judge merely shifts the burden of adducing evidence as distinct from shiftingthe burden of persuasion to the accused.

This court has already so held in R. v. Pereira (released September 22, 1983, as yet unreported)where Martin J.A., speaking for the Court, said:

Summary proceedings for contempt in the face of the court do not infringe the right of an accused to be tried before an impartial tribunaland his right to be presumed innocent. The burden on the accused is an evidential one only and if at the end of the proceedings thereexists a reasonable doubt as to guilt, he is entitled to be acquitted. [Emphasis added]. [54] The words “show cause” in the Rules r 10.52(3)(a)(iii) does not shift the burden of proof to the alleged contemnor.

It merelyindicates that, should the accuser prove all the elements of civil contempt beyond a reasonable doubt, the alleged contemnor has anopportunity to demonstrate why a court should not make that finding. The words “show cause” do not indicate that the allegedcontemnor bears any burden or is required to testify. Accordingly, this procedure does not breach Charter s 11(d), assuming that theCharter applies to such proceedings. In Vidéotron at 1079 the Supreme Court of Canada notes that it has been a common law rule “formany years” that the accused in a contempt proceeding is not compellable.

However, once the accuser has proven all of the elements ofcontempt beyond a reasonable doubt, the evidential burden shifts to the alleged contemnor to demonstrate why a finding of contemptshould not issue. The alleged contemnor may meet this burden in any way they desire.

[55] Because a contempt hearing is quasi-criminal, Charter s 7 applies. Accordingly, as the court said in Cohn at 76: There can be no doubt that any person charged with contempt has the right not to be deprived of the right to life, liberty and security ofthe person except in accordance with the principles of fundamental justice.

Those principles include: the right to be presumed innocentuntil proven guilty beyond a reasonable doubt; the right to be represented by counsel; the right to be tried by an independent andimpartial tribunal in a fair and public hearing; the right to call witnesses; the right not to be called as a witness in the proceedings againsthim; and the right to know with sufficient particularity the nature of the contempt alleged. See also Vale Inco at para 8; Burgoyne Holdings Inc v Magda (2005), (ON SC), 74 OR (3d) 417 at paras 19-20 (SupCt).

Although the alleged contemnor has the right not to be called as a witness in contempt proceedings against them, they have the rightto testify to show cause why the court should not find them in contempt. [56] As with any proceedings on which the alleged contemnor contends that their Charter rights have been breached, they have theonus to prove such breach on a balance of probabilities: see e.g. Delisle v Canada (Deputy Attorney General), (SCC),[1999] 2 SCR 989 at para 76. [57] Schitthelm advised this Court that he is entitled to the protection of

section 5 of the Canada Evidence Act, RSC 1985, c C-5.He did not provide this Court with any further argument or reason why he would be seeking this protection. Accordingly, this Courtmakes no further comment on whether he is entitled to this protection, or the contours of any such protection. G. Sentencing: Limited Use of Contempt Power [58] Once a court has found the alleged contemnor to be in contempt, it should provide a remedy.

In so doing, the court must usethe most limited power it has available to achieve the desired objective: United States v Wilson, 421 US 309 (1975) at 319, cited in K(B)at 197; Arradi at para 33. [59] Recall that the purpose of civil contempt proceedings is coercion rather than punishment: Poje at 517.

Consistent with thelimited use of the contempt power, and the coercion objective, the Rules give the contemnor the opportunity to purge their contempt.Barring special circumstances, the court should postpone its imposition of a penalty or sanction for a period after it finds the contemnorin contempt, to give the contemnor the opportunity to purge their contempt: Braun at 27.

In Braun, the Court noted that the contemnorpurging their contempt “may be a mitigating factor” in the imposition of a penalty or sanction. [60] Further, if the court imprisons the contemnor, the imprisonment must end once the contemnor purges their contempt bycomplying with the order. In In re Armstrong, [1892] 1 QB 327 at 329-330, the court held that the contemnor’s imprisonment wouldend ex debito justitiae, or as of right, when the contemnor “yielded obedience to the order of the Court and paid the costs.” That passagewas quoted with approval in Poje at 518 and cited with approval in Cotroni at 1057. IV.

Conclusion [61] Through this decision, this Court provides the parties with the procedure they must follow when they bring the allegations ofcontempt before the court. Of course, as the matter proceeds, the judge hearing this matter may make rulings on issues that might becontrary to what is outlined in this decision, depending on the facts as they unfold through the hearing. This is in keeping with the notionthat the procedural requirements of each contempt case depend on its specific facts. Heard on the 18 day of October, 2012. Dated at the City of Calgary, Alberta this 15th day of January, 2013.

K.D. Yamauchi J.C.Q.B.A. Appearances: C. Michael Smith (Smith Mack Lamarsh) for the Plaintiff Rinus de Waal (de Waal Law) for the Defendant