Kelana Holdings Ltd v, 2023 ABKB 486

Court of King’s Bench of Alberta Citation: Kelana Holdings Ltd v 393510 Alberta Ltd, 2023 ABKB 486 Date: 20230824 Docket: 1901 17153 Registry: Calgary Between: Kelana Holdings Ltd. Applicant - and - 393510 Alberta Ltd. Operating As Turner Bodyworks and Fabrication, Also Operating As Fleet Works Collision and Frame, and Jeffry Meyers Respondents _______________________________________________________ Reasons for Judgment of the Honourable Justice Lisa A. Silver _______________________________________________________ I.

Introduction [ 1 ] This is an application by Kelana Holdings Ltd. (Kelana) declaring 393510 Alberta Ltd. (393) operating as Turner Bodyworks and Fabrication, also operating as Fleet Works Collision and Frame (Turner), and Jeffry Meyers in civil contempt under s. 13(2) (

k) of the Civil Enforcement Act , RSA 2000, c C-15 ( Act ) or rule 10.52 of the Alberta Rules of Court (ARC ) for failing to deliver property under seizure pursuant to the Act . The Applicant is also seeking an Order directing Turner to deliver the seized property. [ 2 ] For the reasons to follow, I dismiss both applications. II. Issues [ 3 ] The main issue is whether Turner and Jeffry Meyers, as Director and President of the company, are in civil contempt. Initially, Kelana applied for a finding of contempt either under s. 13(2) (

k) of the Act or under rule 10.52 of the ARC . During argument, counsel for Kelana conceded the finding of civil contempt should be made pursuant to s. 13(2) (

k) of the Act but as authorized by rule 10.52(3)(

b) of the ARC .

III. Relevant Legislation [ 4 ] The relevant civil contempt provisions from the ARC read as follows: 10.52

(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. [ 5 ] The relevant excerpts from s. 13 of the Act read as follows: 13(1) In this section, “debtor” means a person against whom civil enforcement proceedings may be taken.

(2) For the purposes of carrying out civil enforcement proceedings, the following applies: (

h) a bailiff, at the time of seizure or at any time after carrying out the seizure, may remove for safekeeping the personal property that is under seizure; (

i) a bailiff may appoint the debtor or some other person as bailee of the personal property that is under seizure if the debtor or other person signs an undertaking (

i) to hold the property for the bailiff and the agency, and (ii) to deliver up the property to the bailiff or the agency on demand by the bailiff or agency; (

j) a debtor who has possession of or control over personal property that is under seizure and has been served with the seizure documents or the documents authorizing the carrying out of the distress in respect of that property (

i) holds that property as bailee for the bailiff and the agency, and (ii) must deliver up that personal property to the bailiff or the agency (

A) when required to do so by the bailiff or the agency, and (

B) at a location specified by the bailiff or the agency, whether or not the debtor has signed an undertaking referred to in clause (i); (

k) where a person (

i) is under a duty to deliver to a bailiff or an agency personal property that is under seizure, and (ii) defaults in delivering the personal property to the bailiff or agency within a reasonable time after being required to do so by the bailiff or the agency, the Court on application may hold that person liable for civil contempt and award damages and costs against that person. IV. Background

A. The Lease and the Landlord’s Distress [ 6 ] Turner, operating as an autobody business, entered into a five-year rental lease agreement with Kelana on February 9, 2018. Jeffry Meyers, the Director of Turner, signed an Indemnity Agreement with respect to the lease. [ 7 ] Turner failed to pay rent for November of 2019. Kelana exercised its right of distress for unpaid rent. It directed a bailiff to seize the personal property found on the leased premises pursuant to the Act .

The bailiff attended the premises on November 8, 2019. [ 8 ] Jeffry Myers was not on site when the bailiff arrived but was aware of the seizure. When Jeffry Meyers did attend, the bailiff served him with several documents including the completed Notice of Seizure of Personal Property with Addendum (First Notice and Addendum) and Notice – Debtor’s Appointment as Bailee (Bailee Notice). [ 9 ] On November 18, 2019, Jeffry Meyers received an amended First Notice and Addendum.

The only change was to the Addendum adding the forklift’s serial number. [ 10 ] Jeffry Meyers filed a Notice of Objection to the seizure on December 4, 2019. [ 11 ] A second Warrant and second Notice of Seizure with Addendum (Second Notice and Addendum) was subsequently issued for non-payment of the December 2019 rent. By this time, the lease was terminated. A different bailiff attended on the premises on December 7, 2019.

Turner filed a second Notice of Objection for the seizure. [ 12 ] In May of 2020, Jeffry Meyers advised the bailiff via email that some of the assets on the seizure list were being relocated from the original distress location to a new operating location. [ 13 ] On November 23, 2020, Application Judge Mason dismissed the first Notice of Objection but upheld the second Notice of Objection. As a result, Kelana could only enforce the First Notice and Addendum from November of 2019. [ 14 ] On December 1, 2020, Kelana authorized the bailiff to enforce the First Notice and Addendum.

On that date, the bailiff from the first seizure attended at the original leased location and the new operating location. Jeffry Meyers was present at the time. The bailiff removed items from both locations. [ 15 ] In the Bailiff’s Report from December 1, 2020, Jeffry Meyers was asked about the miscellaneous items listed in the First Notice and Addendum.

According to the Report, Jeffry Meyers was uncooperative. [ 16 ] Subsequently, Kelana brought an application against Turner and Jeffry Meyers as Director of Turner for civil contempt by failing to deliver to the bailiff all the items indicated in the First Notice and Addendum. B.

The Seizure Documents [ 17 ] Pursuant to s. 1(1)(pp) of the Act and s. 2 of the Civil Enforcement Regulations , Alta Reg 276/95 ( Regulations ), seizure documents include the Distress Warrant (Warrant), the Notice of Seizure and Addendum, the Notice of Objection, and the Information for Debtor. [ 18 ] A seizure occurs when the seizure documents are served on the debtor, an adult working at the location or a person who has possession or control over the property: s. 45(1) (

a) of the Act . [ 19 ] Unlike the seizure documents from the second distress, the Warrant and the First Notice and Addendum from November 2019 did not include Jeffry Meyers as debtor and was directed to Turner only. [ 20 ] Jeffry Meyers was not asked to sign the Bailiff’s Undertaking and did not do so. [ 21 ] In the First Notice and Addendum, the debt claimed for the seizure was $52,636.18, equal to one month of rental arrears, plus costs. [ 22 ] In the Addendum to the First Notice, fifteen separate items or group of items were listed on one column of one page.

Three of the descriptions did not include quantity but described the items as “misc parts room inventory,” “misc tools in tool room,” and “misc office supplies.” The Addendum ended with the phrase “all additional personal property of the debtor,” and was signed by the bailiff. [ 23 ] The Addendum to the Second Notice from December 7 of 2019, spanned nine pages with two columns of items listed on each page. Many of the items listed contained a detailed description of each item, or group of items, including quantity.

For example, the Addendum listed “1 Canbuilt yellow pro optical headlight.” The Addendum also ended with the phrase “all additional property of the debtor.” [ 24 ] The Information for Debtor explains to the recipient the basis of the seizure (either to satisfy a judgment or a landlord’s claim for unpaid rent), and the potential exemptions to seizure including the right to submit a Notice of Objection within a certain time period. [ 25 ] The Bailee Notice contained the following information: • “under Section 13(2) (

i) and (

j) of the Civil Enforcement Act, you are hereby appointed as bailee , for the goods contained within the attached Notice of Seizure.” The underlining is reproduced from the document. • “the seized personal property must be preserved in its present condition and value” and the bailee is “responsible for safekeeping and delivery” of the seized property on demand.

• the bailee must advise in writing of any change in address “or incidents involving the seized property that would affect the value of the property in any way.” • the bailee “may continue to use the seized property in the normal fashion it was designed and purchased for.” • provisions from the Criminal Code on theft by bailee. C. Questioning of Jeffry Meyers [ 26 ] At Questioning of Jeffry Meyers on October 19, 2022, he could not recall discussing the miscellaneous items with the bailiff on December 1, 2020.

He explained his new operating premises was much smaller than the original location and did not have a separate parts or tools room. [ 27 ] Jeffry Meyers also explained there were no LG desktop computers on the premises as LG only made laptop computers. Moreover, the printers, which were on the premises, were not manufactured by Cannon.

Although Jeffry Meyers pointed out the printers to the bailiff on December 1, 2020, the bailiff did not take the printers because they were not made by Cannon. [ 28 ] Turner used many of the components from the tools and parts rooms when servicing vehicles over the course of the time between seizure and delivery of the seized property. [ 29 ] According to Jeffry Meyers, the gross amount raised from the sale of the seized items was $61,745. D. The Missing Items [ 30 ] In support of the application, the February 10, 2021 affidavit of the Director of Kelana, Cindy Clark, was submitted.

The affidavit contained the following list of items missing from the seized property: (

a) Jack Stands; (

b) Microwaves in the luncheon; and reception area; (

c) Computer equipment including monitors, keyboards and printers; (

d) Office furniture; (

e) Office supplies; (

f) Paint materials; (

g) Miscellaneous parts; (

h) Television screens; and (

i) Miscellaneous equipment. [ 31 ] In Exhibit D to the affidavit, photographs of the missing items were included. The photographs were taken by the bailiff on November 8, 2019. The photographs depict areas of the leased premises with numerous items both in and out of boxes. [ 32 ] In one photograph of the parts room, several closed metal drawers in shelving were depicted. At Questioning, Jeffry Meyers explained various nuts and bolts used in the autobody shop could be found in those drawers.

There were no photographs of the interiors of the drawers from the time of the seizure. [ 33 ] A further March 11, 2022 affidavit from Cindy Clark contained a revised list of items not provided to the bailiff during the seizure as follows: (a) 8 LG desktop computers including keyboards, mouses and towers; (b) 2 Cannon printers; (c) 1 black and vinyl steel chair; (d) 2 microwave ovens; (

e) Miscellaneous parts room inventory; and (

f) Miscellaneous tools in tool room. V. Position of the Parties [ 34 ] Counsel for Kelana submitted that Turner and Jeffry Meyers, as Director of Turner, are in civil contempt by failing to deliver within a reasonable time all personal property under seizure pursuant to the First Notice and Addendum of November 8, 2019 when required by the bailiff on December 1, 2020. Counsel for Turner and Jeffry Meyers maintained the personal property subject to seizure

was delivered by Turner to the best of its ability, and neither the corporation nor Jeffry Meyers are in civil contempt. [35] Both parties agree that during the time in which the first Notice of Objection was subject to scrutiny, Turner was permitted tocontinue its autobody business. In May of 2020, Jeffry Meyers advised the bailiff it was moving some of the property from the distresslocation to another operating location. The business was an ongoing concern, requiring the use and consumption of certain property thatwas on the premises when the First Notice and Addendum was served.

For example, as part of the ongoing business, Turner used paintand bolts in its bodywork activities. [36] Even so, Counsel for Kelana argued that not all the items subject to distress were consumables, and in any event, Turner wasobliged to replace those consumables for purposes of seizure. Counsel could not point to any legal authority that required replacement ofthese consumables, other than to submit that all property in the distress location was subject to seizure and must be delivered whenseizure takes place, even if the seizure is a year later.

Counsel suggested that every nut and bolt used during the business throughout thatyear should be noted, accounted for, and replaced in anticipation of seizure. [37] Turner’s counsel maintained it would be virtually impossible for the business to keep track of all items used over the course ofthe ongoing business considering the passage of time, being little more than one year between the service of the First Notice and thedemand for delivery of the property. [38] Counsel for Turner also argued that the outstanding miscellaneous items noted in the Addendum are vague, non-specific, andtoo broadly worded for Turner to identify what needed to be delivered to the enforcement agency for sale.

Moreover, the bailiff listeditems in the Addendum that were simply non-existent, such as the LG desktop computers or items that were mislabeled, such as theprinters. [39] Kelana’s counsel responded that Turner, as owner of the property, had the best knowledge of the extent of the property underseizure and it was Jeffry Meyers and Turner’s obligation to comply with the Act. VI. Analysis A. Statutory

Interpretation [40] There is no case law on the

interpretation and application of civil contempt under s. 13(2)(

k) the Act. To assist in the analysisof this case, I will rely upon the modern approach to statutory

interpretation. [41] This approach requires the words of s. 13(2)(

k) of the Act to be read “in their entire context and in their grammatical andordinary sense harmoniously with the scheme of the Act” and the legislative intention: Rizzo & Rizzo Shoes Ltd (Re), [1998] 1 SCR 27at 41, ; Bell ExpressVu Limited Partnership v Rex, 2002 SCC 42 at para 26. [42] The scheme of the Act as well as the legislative intent in creating the statute can be gleaned from the general principlesoutlined under s. 2 of the Act.

Section 2(

g) specifically requires the “rights duties and functions of creditors, agencies and bailiffs” to be“exercised or discharged in good faith and in a commercially reasonable manner.” [43] Alberta Justice publishes the Civil Enforcement Procedure Manual (Manual). The Manual is accessible online through theAlberta King’s Printer where it is described as containing “the legislation and information necessary to operate a Civil EnforcementAgency or act as a Civil Enforcement Bailiff.” [44] I find the Manual also provides context and meaning to the words of the statute, the scheme of the Act, and the legislativeintent.

It is a guide used in the civil enforcement business and informs the best practices and procedure of civil enforcement. [45] The

section must also be viewed within the context of the landlord’s right to distress for nonpayment of rent under thecommon law. [46] Finally, the

section should be interpreted in a manner consistent with the principles of civil contempt. B. The Right of Distress [47] Distress is a common law self-help remedy exercised by the landlord to seize property of the tenant to satisfy rental arrears:954470 Alberta Ltd v GDS & Associates Systems Ltd, 2007 ABQB 242 at para 18 [GDS]; 1694879 Ontario Inc v Krilavicius, 2017ONSC 2396 at para 91 [Krilavicius]. [48] The right of distress flows from the landlord and tenant relationship. It is a remedy that contemplates the continuance of thelease. The tenancy is not terminated.

Distress proceedings do not exclude the tenant from the premises or from carrying on theirbusiness: Krilavicius at para 93. [49] In Alberta, the right of distress is exercised under the Act: GDS at para 19. Even so, the right of distress is an “extraordinarypower,” permitting seizure of property without first obtaining judgment against a debtor: B. Ziff, J. de Beer, D. D. Harris, and M.E. McCallum, A Property Law Reader: Cases, Questions and Commentary, 4th ed (Toronto: Carswell, 2016) at 640. C. Exercising the Right of Distress Under the Manual [50] The Manual discusses Landlord Distress Seizure in

Part 8.

[ 51 ] According to

Part 8.6, 8.8 and 8.12, the Notice of Seizure and Addendum should contain a description of the seized property including “the quantity, serial number, make, model, year and colour, if applicable, and any other information to help identify the property.” [ 52 ]

Part 8.9 outlines the “Procedure for Effecting Seizure,” including offers of settlement or negotiated settlements that can circumvent a seizure and a removal of property. The concept of settlement is consistent with the continuance of the tenancy. It is also consistent with the “self-help” nature of common law distress, whereby repayment is accomplished outside of the courts. [ 53 ] If settlement cannot be agreed upon,

Part 8.11 advises the bailiff to “proceed to seize” but the bailiff must “physically see and be able to lay his hands on the personal property being seized in order to effect a proper seizure.” Moreover, the “seizure must be made on the personal property situated on the rented premises and to a value sufficient to cover the arears of rent and costs.” [ 54 ]

Part 8.12 refers to “seizure stickers”, which are used “when the property cannot be readily identified, e.g. because it has no serial number.” According to

Part 8.13, stickers may also be used if “no one is available to sign a Bailee’s Undertaking and immediate removal is not possible” or where the property is “difficult to accurately describe” or where there are concerns with removal or hiding of the property. The bailiff is to place an identification number on the sticker, the civil enforcement agency file number, and the bailiff’s signature. [ 55 ]

Part 8.14 recommends that if no one signs the Bailee’s Undertaking, “the Bailiff should consider removal and storage of the seized property to ensure its safekeeping.” The advantage of signing an undertaking, according to the Manual, is that the person can “continue to use the seized items.” [ 56 ] The importance of obtaining a signed Bailiff’s Undertaking is further reiterated under 8.16 “removal” where the bailiff who cannot obtain such an undertaking is advised to contact the Agency to determine if the property should be removed. [ 57 ]

Part 8.19 suggests that “only the debtor or his agent has the right to object to the seizure”. D. The Statutory Elements of Civil Contempt Under the Act [ 58 ] There are several requirements outlined in s. 13(2) (

k) of the Act , which must be fulfilled before a contemnor may be found liable for civil contempt, as follows: 1. The contemnor must be a person; 2. The person must be under a duty; 3. The person must deliver the personal property under seizure; 4. The person defaults in the delivery to the bailiff or agency of the property under seizure if the property is not delivered within a reasonable time after being required to do so; and 5. When the above elements are fulfilled, the Court “may hold that person liable for civil contempt.” 1. Who is the “person”? [ 59 ] Under s. 1(1)(ii) of the

interpretation

section of the Act , “person” is deemed to include the Crown in certain circumstances. The

Interpretation Act , RSA 2000, c I-8 applies to all provincial legislation, and offers a further definition of “person” under s. 28(1) (nn), which includes a corporation. Therefore, a contemnor may also be a corporation. 2. What is the “duty”? [ 60 ] Section 13(2)(

k) requires the person subject to civil contempt be under a duty to deliver the personal property under seizure to the bailiff or agency. Although the term “duty” is not defined under the Act , on review of the entirety of s. 13 , I find “duty” refers specifically to the immediately preceding subsections under ss. 13(2) (

i) and 13(2) (j). [ 61 ] Section 13(2)(

i) creates a general duty on the debtor or “some other person” to act as bailee of the seized property upon the signing of the Bailee’s Undertaking. A Bailee’s Undertaking is signed, for instance, by the auction agency when the bailiff transfers seized property to the agency for sale. [ 62 ] Section 13(2)(

j) creates a separate and specific bailee duty in situations where the landlord is exercising its right of distress. The

section applies when the debtor is in possession or control of the property and has been served with the seizure documents.

The debtor then becomes the bailee of the seized property for the bailiff and must deliver that property when required to do so. [ 63 ] The debtor is defined under s. 13(1) as “a person against whom civil enforcement proceedings may be taken.” This person or corporation is the debtor indicated in the seizure documents. [ 64 ] Both sections create well-defined duties between the designated bailee, who may be the debtor, and the bailiff as agent for the landlord, to safeguard and deliver the property under seizure when required.

It is a duty consistent with the overarching principles of the Act , which is predicated on good faith and reasonable commercial practices. [ 65 ] This duty is required because distress involves two separate actions of seizure and removal. These actions are separate because removal may not occur contemporaneously with seizure. For instance, seizure and removal may be separated in time, often days, where a Notice of Objection is filed. Moreover, the debtor may file an objection to either part or all the seizure, which, if successful, will

terminate the distress proceedings before removal occurs. [ 66 ] To fill the temporal gap between seizure and removal, the bailee relationship, as explained in the Bailee Notice, is created to preserve the seized property in its “present condition and value” and to deliver the seized property when required by the bailiff. [ 67 ] Even though s. 13(2) (

j) outlines a bailee duty where there is a distress proceeding, according to

Part 8 of the Manual, a Bailiff’s Undertaking is often used. I find that a signed Bailiff’s Undertaking is not essential to the creation of a duty under s. 13(2) (

j) of the Act . However, before a person can be found in civil contempt under the Act , a duty under s. 13(2) (

i) or 13(2) (

j) must be established. Moreover, in the case of distress under s. 13(2) (j), the person must be a debtor under the Act . 3. What is the “personal property under seizure”? [ 68 ] The bailee’s duty is to deliver the personal property under seizure. According to the Act , all non-exempt or exigible property of the debtor’s found on the premises is subject to seizure. Even so, in a distress situation not all property subject to seizure is seized or the bailee may be liable for “excessive” distress by seizing property that is greater than the value of the debt plus costs: H. Haber and K.

Beallor (editors), Landlord’s Rights and Remedies in a Commercial Lease: A Practical Guide , 2 nd ed (Toronto: Thomson Reuters, 2017) at 51-53. The Manual cautions against this practice at

Part 8.11. Moreover, the Notice of Seizure is directed to the specified amount of rental arrears. It is the non-payment of rent, which creates the right of distress and authorizes the distress proceedings. [ 69 ] I therefore find the phrase “property under seizure” reflects the reality that only the property amounting to the approximate value of the rental arrears plus enforcement costs will be under seizure. In short, the property under seizure will depend upon the amount of the debt. [ 70 ] As discussed, the Act and the Manual speak of seizure and removal as different actions in the distress proceedings.

The distress proceedings involve seizure of property but not necessarily removal from the premises. The separation between seizure and removal, as well as limiting seizure to the debt plus costs, permits the tenant to continue business on the leased premises until the arrears are paid. This approach is consistent with the continuance of the tenancy. [ 71 ] According to the Manual, seizure is achieved by the bailiff “physically” seeing the property to be seized and “laying his hands” upon it.

This metaphorical “laying of the hands” requires the bailiff, through their physical observations, to capture the property under seizure through a detailed description in the Notice of Seizure and Addendum. [ 72 ] The importance of a detailed Notice of Seizure and Addendum is further underlined by s. 45(1) of the Act , requiring the seizure documents to be properly served for a seizure to be effective. It is not the act of service alone that produces an effective seizure.

The documents, which include the Warrant, the Notice of Seizure, the Notice of Objection, and the Information to the Debtor, fulfill crucial informational functions, which are connected to an effective seizure. In other words, the content of these documents is an integral part of the seizure process. These documents ensure the debtor understands the import of the seizure and the obligations arising from the distress procedure.

It is vital that those documents reflect the true nature of the seizure including the specific items under seizure. [ 73 ] The specificity required in the Notice of Seizure and Addendum is further informed by the potential use of seizure stickers. These stickers are used when words cannot adequately or accurately describe the property. The stickers assist the debtor in tracking the property under seizure in a distress proceeding where the debtor is permitted to carry on business.

It also assists the bailiff in identifying the property under seizure when they return to remove the property. [ 74 ] The seizure stickers are a substitute for the description in the Notice of Seizure and Addendum. The Addendum description therefore should be as accurate as the seizure stickers. This requires the descriptions in the Addendum to describe the property adequately and accurately as recommended in the Manual. This should include quantity, serial number, make, model, year, and colour, if applicable, and any other information to help identify the property.

I find that without an accurate description, the Notice of Seizure lacks the informational component needed to achieve an effective seizure under the Act . [ 75 ] The Notice of Seizure and Addendum should provide a detailed description of the property under seizure to demarcate the property under seizure from property that is not under seizure. This is particularly important in distress proceedings where the debt is limited to rental arrears and costs of enforcement.

It also notifies the bailee of which property must be safeguarded and delivered pursuant to its duty under the Act . [ 76 ] I find that “property under seizure” means the property that is adequately and accurately described and listed in the Notice of Seizure, including the Addendum, if applicable, and the seizure stickers, if used. [ 77 ] This finding is consistent with distress principles under the common law contemplating the continuance of the tenancy and of the tenant’s business.

It is also consistent with the general principles of the Act , the Manual, and with the potential jeopardy for civil contempt under s. 13(2)(

k) of the Act and under the theft by bailee sections in the Criminal Code . 4. What is “ defaults in delivering the personal property to the bailiff or agency within a reasonable time”? [ 78 ] The last element of the

section requires the person default in the delivery of the property. I find this requires a failure of the person to deliver the property under seizure to the bailiff within a reasonable amount of time after being required to do so. The failure to deliver is connected to the specific property under seizure and the duty created by the Act as discussed earlier. [ 79 ] There is no definition in the Act of what would be considered as reasonable time to deliver the property under seizure.

Bearing in mind the temporal nature of the phrase, and the principles underlying the Act and the right of distress, the reasonable time allotted should account for the tenant’s ability to continue operating their business on the rental premises. In those circumstances, sufficient time might be needed to deliver the property under seizure while ensuring the tenant’s business operations are not adversely impacted. The reasonableness of the time allowed may also be affected by the Notice of Objection, which could impact which property is under seizure.

I conclude, therefore, that what would be considered reasonable time under the

section involves a fact-specific and context driven assessment. 5. What is the meaning of “Civil Contempt” under the Act? [ 80 ] The term “civil contempt” is used under both the ARC and the Act . Civil contempt is also a common law power. Counsel was unable to produce any case law on the relationship between a finding of civil contempt under the Act and the civil contempt principles found in Carey v Laikon , 2015 SCC 17 , which are based on the common law. [ 81 ] To understand what meaning to ascribe to this term under s. 13(2)(k), I will review the forms of civil contempt under the ARC .

I will then compare these forms of civil contempt to some of those found under provincial legislation. I will also discuss to what extent, if any, the Carey decision, and the common law principles of civil contempt as found in the case law, inform the meaning of and approach to civil contempt under the Act .

a) Civil contempt under the ARC [ 82 ] Rule 10.52(3)(

a) enumerates various specific forms of civil contempt: Feeney v Simon , 2020 ABQB 759 at para 14 . These forms of contempt can be further categorized into two kinds of contempt: contempt related to conduct in court and contempt relating to conduct outside of court. Rule 10.52(3)(a)(

i) and (iii-iv) pertain to conduct outside of court involving a failure to comply with court orders, while subsection (vi) is a failure to perform or observe “the terms of an undertaking given to the Court.” Rule 10.52(3(a)(ii) and (

v) involve contemptuous conduct in the courtroom. [ 83 ] For purposes of this case, I will leave aside the law pertaining to contempt based on contemptuous conduct in the courtroom. In terms of conduct occurring outside of court, such as a failure to comply with a court order under rule 10.52(3)(a)(

i) and (iii-iv), the party applying for the contempt finding must prove beyond a reasonable doubt the three elements of civil contempt as outlined in the Carey decision: Oommen v Capital Housing Corporation , 2017 ABCA 143 at para 16 ; Koch v Koch , 2017 ABCA 310 at para 14 ; Envacon Inc v 829693 Alberta Ltd , 2018 ABCA 313 at para 8 [ Envacon ].

Together, these elements require “proof beyond a reasonable doubt of an intentional act or omission that is in fact a breach of a clear order of which the alleged contemnor has notice”: Carey at para 38 . [ 84 ] There are few cases on civil contempt under rule 10.52(3)(a)(vi), which is a failure to comply with the terms of an undertaking given to the court. This form of civil contempt may refer to the implied undertaking rule found under rule 5.33, which protects and enforces the confidentiality of information and records disclosed during litigation.

Such a breach of the rule has found to be analogous to a breach of a court order and the requirements for civil contempt from Carey has been applied to rule 10.52(3)(a)(vi): Olkowski v Nano-Green Biorefineries Inc , 2023 ABKB 441 at paras 70-72 [ Olkowski ]. [ 85 ] Although not a decision on civil contempt under the ARC , Justice Henry Brown of the Federal Court, in Whitford v Red Pheasant First Nation , 2022 FC 436 , aff’d 2023 FCA 29 [ Whitford ] offers commentary on undertakings given at an oral examination and whether a failure to fulfill such undertakings can ground a civil contempt finding. [ 86 ] Justice Brown found that undertakings, once given, become an “enforceable obligation” to fulfill: Whitford at paras 137-138 .

In this way, undertakings are “enforceable promises” made to the parties in the action and to the court: Whitford at para 13 . As such, “undertakings have the effect of an Order of the Court, and if not honoured, may be enforced including by motion to compel, motion to strike and ultimately by proceedings for contempt”: Whitford at para 137 . [ 87 ] This finding is supported by Justice Côté ’s comments in Bains Engineering Corporation v 734560 Alberta Ltd , 2005 ABCA 187 [ Bains ] .

In that case, Justice Côté at paragraph 7 suggested that a “breach of a formal undertaking or order is a serious matter, not a matter of form.” Although in Bains there was a court order requiring answers to outstanding undertakings by a certain date, Justice Côté found a “failure to carry out an undertaking is also contempt.”: Bains at para 13 ; see also Kin Franchising Ltd v Donco Limited , 1993 ABCA 7 .

b) Comparing civil contempt under the ARC with provincial statutes [ 88 ] Civil contempt under Rule 10.52(3)(

b) can flow from any provincial statute that provides for such a finding. The forms of civil of contempt found in those statutes typically mirror similar forms of contempt under rule 10.52(3)(a). [ 89 ] For example, s. 38 (a)(

b) of the Emergency Health Services Act , SA 2008, c E-6.6 provides for civil contempt proceedings where a witness refuses to be sworn similar to rule 10.52(3(a)(v).

This is a form of civil contempt found under many provincial statutes and is used to compel compliance before an administrative tribunal or panel constituted under the statute: see also Ambulance Services Act , SA 1990, c A-40.5, s. 24 (b); Nursing Profession Act , SA 1983, c N-14.5, s. 73(1) (b); Land Surveyors Act , SA 1981, c L-4.1, s. 49(1) (b). [ 90 ] Many of these provincial statutes also base civil contempt on conduct that fails to comply with notices issued under the statutory authority, which requires a person to do certain acts.

For instance, under s. 49(1) (a)(ii) of the Land Surveyors Act , civil contempt may be brought against a witness who fails to produce documents pursuant to a notice of production: see also Forestry Profession Act , SA 1985, c F-15.5, s. 35 (a)(ii).

Although there is no directly analogous form of civil contempt under the ARC , certainly a failure to produce documents when so ordered by the court could attract a civil contempt application under rule 10.52(3)(a)(i). [ 91 ] The other typical form of civil contempt found under provincial legislation relates to non-compliance of orders or directives similar to rule 10.52(3)(a)(i). An example of this can be found in the labour context under s. 14(1) of the Public Sector Services Continuation Act , SA 2013, c p-41.5 .

This type of civil contempt ensures compliance of orders issued by an administrative tribunal, or a Minister, such in the case of a stop order under s. 20 of the Agricultural Pests Act , SA 1984, c A-8.1 .

[92] There are atypical forms of civil contempt in provincial legislation that are specific to a particular statute. For instance, civilcontempt may be based on prohibited communication with members of a jury such as in s. 23(1) of the Jury Act, RSA 2000, c J-3. [93] In a review of Alberta case law, there is no decision that substantively speaks of the elements or proof requirements of civilcontempt under provincial statutes where civil contempt is not founded on an order or directive similar to rule 10.52(3(a)(

i) and (iii-iv).

c) Civil contempt under the Act and applicable common law principles [94] In this case, the authority to declare a person in civil contempt is based on the failure to comply with s. 13(2)(

k) of the Act, noton a failure to comply with a court order. The question remains to what extent, if any, the Carey decision, and the common lawprinciples of civil contempt, applies to a finding of civil contempt under the Act. [95] There are no decisions discussing civil contempt under the Act where there is no breach of a court order. There is one decisionfrom outside of Alberta that has some similarities. Although issued before Carey, it applies common law civil contempt principles.

InAlran Industries Ltd v Delta Cedar Products Ltd, (BCSC) [Alran], Justice Wilson considered a finding of contemptbased on the defendant’s failure to comply with a Writ of Attachment issued under the Woodworker Lien Act, RSBS 1996, c 491 for non-payment of labour or services relating to logging. The Writ was issued by the Supreme Court’s Registrar, and then sent to the bailiffs forenforcement.

The Writ was affixed to booms of spruce logs owned by the defendant and it specifically prohibited the removal or cuttingof the logs “so they could not be identified.” The defendant removed the logs to the mill for cutting, and then ultimately to an ant-staintreatment facility. In doing so, the defendants kept the seized lumber separate and apart from the other lumber being treated. [96] In deciding whether there was an “order” in place, Justice Wilson found the Writ, because it was issued by the court’sRegistrar, was an order for which a contempt finding could be made: Alran at para 14.

The court also found that the elements ofcontempt were required to be proven beyond a reasonable doubt: Alran at paras 15-16. In Alran, the prohibited conduct was the removalor cutting of the logs so they could not be identified contrary to the Writ. As the defendant could identify the logs to which the Writattached, Justice Wilson found the prohibited act was not proven beyond a reasonable doubt: Alran at para 20. [97] Justice Wilson provided an alternate basis for dismissing the contempt application.

In his view, the additional phrase in theWrit requiring the logs not be removed or cut “so they cannot be identified” rendered the terms of the order ambiguous: Alran at para21.

This lack of clarity was contrary to the law, which held that an applicant could not “rely on an ambiguous order” in a finding ofcontempt: See also United Steelworkers of America Local 663 v Anaconda Co (Canada) Ltd, 3 DLR (3d) 577 (BCSC), ; 984 Enterprises Inc v Strider Resources Ltd et al, 2013 MBCA 100 at para 40. [98] Justice Wilson’s position is consistent with the first element in Carey that the order underlying the contempt allegation beclear and unequivocal. [99] In the Masterbuilder decision, Justice Feehan, as he then was before his elevation to the appellate court, expanded on thiselement of civil contempt from Carey by explaining that “an order may be found to be unclear if it is missing an essential detail aboutwhere, when or to whom it applies, if it incorporates overly broad language, or if external circumstances have obscured its meaning.”:Masterbuilder at para 44.

This description also aligns with the findings in the Alran decision. [100] The difficulty in the situation before me is that civil contempt under the Act does not rely on a court order nor does the seizuredepend on a judgment emanating from the court. As mentioned, the right of distress is a self-help remedy exercised outside of the court’spurview.

The Act merely provides a statutory process and procedure for enforcing that common law right. [101] Although there is no court order underlying civil contempt under the Act, I find that the duty to deliver the property underseizure pursuant to properly served seizure documents is analogous to a breach of a court order. Therefore, the elements of civil contemptas outlined in the Carey decision applies for the following reasons. [102] First, this form of civil contempt depends on a duty or obligation creating a bailee and bailor relationship.

Similar to anundertaking to the court or an undertaking during the course of litigation as discussed in the Olkowski and Whitford decisions,respectively, this duty becomes an enforceable promise or obligation analogous to a court order. [103] Second, although not court generated, the Warrant, the Notice of Seizure and Addendum, and the Bailee Notice can be viewedas directives issued through a legal process. These directives, such as the bailee obligation to preserve the property, have legalconsequences if not followed including the potential for criminal liability.

Moreover, the seizure documents form the basis of aneffective seizure. An analogy can be drawn between disobedience of distress seizure documents, which include the Notice of Seizurewith Addendum, and disobedience of court orders. This is further supported by other provincial legislation, which base contemptproceedings on failures to comply with notices issued under the statutory authority. [104] Third, this above reasoning is consistent with the principles of civil contempt.

The primary purpose of civil contempt iscoercive, using the force of law, when needed, to ensure legal compliance and respect for the rule of law. Civil contempt also has apunitive dimension that uses criminal like sanctions to underline the seriousness of the non-compliance: Carey at paras 31-32, 36;Envacon at paras 64-65. [105] I therefore find that the elements of “civil contempt” under the Act are also founded in the common law, which “requires proofbeyond a reasonable doubt of an intentional act or omission that is in fact a breach of a clear order of which the alleged contemnor hasnotice”: Carey at para 38.

In Alberta, civil contempt is distilled to the proof of three elements, which are

i) the order must state clearlyand unequivocally what should be done (or not done); (ii) the alleged contemnor must have actual notice of the order; and (iii) thealleged contemnor must have intentionally failed to do the act compelled by the order: 473440 Alberta Ltd v Lenaco HomesMasterbuilder Inc, 2017 ABQB 538 at para 44 [Masterbuilder]; Envacon at para 8. E. Application to the Case

1. Who was the person under the duty to deliver? [ 106 ] Applying the definition of person, which includes corporations, I find that Turner is a “person” as contemplated by the section. That does not end the matter, as the “person” must have the duty to deliver the property under seizure under s. 13(2) (

i) or 13(2) (j). [ 107 ] In the circumstances of this case, the specific duty for distress proceedings under s. 13(2) (

j) applies. This

section creates a duty between the debtor and the bailiff. The debtor, as defined by the Act , is the person against whom enforcement proceedings are taken. In the case at bar, in accordance with the Warrant and the First Notice and Addendum, that person would be the corporation known as Turner. [ 108 ] The Applicants argued that Jeffry Meyers as the Director and operating mind of Turner would be subject to the contempt

section in the Act . Practically, this is correct. If Turner is found to be in civil contempt, it would be Jeffry Meyers, the Director of Turner, who would facilitate any costs payment and/or any fine Turner may be obliged to pay. However, it is Turner alone, as the debtor, who would be found in contempt under the Act , not Jeffry Meyers personally. 2. Was there a duty to deliver? [ 109 ] Turner, as the debtor, fulfills the requirements as bailee in a distress proceeding under s. 13(2) (

j) and is therefore under a duty to deliver the property under seizure. Turner had possession and control over the property at the time of seizure and was served with the seizure documents. Moreover, Jeffry Meyers, as agent and Director of Turner, filed a Notice of Objection on Turner’s behalf. In that same capacity, Jeffry Meyers also advised the bailiff of removal of some property under seizure to another location pursuant to the Bailee Notice. 3.

What was the property under seizure? [ 110 ] The Addendum to the First Notice, which is one column of one page in length, provides minimal details of the items under seizure. As mentioned earlier, according to the final information provided by Kelana, the missing items as listed in the Addendum were: (a) 8 LG desktop computers including keyboards, mouses and towers; (b) 2 Cannon printers; (c) 1 black and vinyl steel chair; (d) 2 microwave ovens; (

e) Miscellaneous parts room inventory; and (

f) Miscellaneous tools in tool room. [ 111 ] The Addendum does not fulfill the descriptive requirements found in the Manual. It describes most of the property in generalized terms such as “microwave ovens” without the manufacturer names. In the two instances where the manufacturer is named, the description is inaccurate.

LG does not make desktop computers and the printers were not made by Cannon. [ 112 ] There is only one description in the Addendum that mentions colour, which is the black and steel chair, with no indication of manufacturer or any other descriptor. [ 113 ] Although four of the six items are quantified, two of the items are not. Those two descriptions use generalized terms to describe the items, listing miscellaneous parts room inventory and tools in the tool room.

There are no quantities indicated or other descriptors except for location in a room. [ 114 ] In contrast, the second seizure performed a month later at the same premises resulted in a more descriptive and detailed Addendum, covering nine pages. For the most part this second Addendum complies with the Manual. [ 115 ] As discussed, the Notice of Seizure including the Addendum, if any, fulfills an important informational and legal component of the seizure under the Act . I therefore find the First Notice and Addendum of November 8, 2019 does not fulfill the requirements for seizure under the Act .

The First Notice and Addendum is deficient and inaccurate. It fails to apprise the debtor and the landlord of which property was under seizure. [ 116 ] The Addendum is inaccurate and in error as it contains items not even in existence, such as the LG desktop computers, and the Cannon printers.

This inaccuracy meant that although Turner tried to comply with the delivery of some of the goods under seizure, such as pointing out the printers to the bailiff, they were unable to comply because the bailiff, who was guided by the Addendum, was working under an inaccurate conception of what property was under seizure. [ 117 ] The Addendum is deficient as it fails to provide a detailed description of the property under seizure. The bailiff could have rectified this deficiency by using seizure stickers, but he did not.

He also could have provided a quantity and description of each tool or parts under seizure, but he did not. I find it would be difficult to comply with the requirement of s. 13(2)(

k) that Turner deliver the property under seizure, considering there was no fixed concept of what property was under seizure. [ 118 ] Although pictures are “worth a thousand words,” in this case, the photographs merely confirm the difficulty of determining what sort of property was under seizure. The photographs show shelving and drawers but not what was inside of them. They show boxes

and objects without explanation of what they contain or what they were. [ 119 ] At minimum, the Addendum should have listed the quantity and descriptions of the items in the tools and parts rooms. The fact that quantity is an important feature of the description is highlighted by the position of Kelana’s counsel that when Turner used the parts, they were required to keep a running tab of the quantity of items used. If Turner is obliged to do this, then they must have a quantity from which to work. That quantity was not enumerated in the First Notice and Addendum.

Although Turner had an obligation to safeguard the property under seizure as bailee, they did not have an obligation to decipher which property was under seizure outside of the seizure documents. [ 120 ] The difficulty of determining which property was under seizure is exemplified by Kelana’s own evidence. The list of missing items in Cindy Clark’s affidavit of February 10, 2021 does not match the list of items in Cindy Clark’s affidavit of March 11 2022. The February list for example references “miscellaneous equipment,” which is not an item specifically indicated in the Addendum.

This, together with the errors in the Addendum, highlight the shifting nature of the “property under seizure” in this case. [ 121 ] Applicant’s counsel pointed to the blanket phrase placed at the end of the Addendum indicating “all property” was under seizure. I find that this statement is a pro forma basket clause that is inconsistent and out of step with best practices and the procedure detailed in the Manual, requiring a detailed and accurate description of the property under seizure.

It is also inconsistent with the bailiff’s potential liability for excessive distress and commercial distress practices, where overreach should be carefully contained. [ 122 ] The statement is also contrary to the informational aspects of the Notice of Seizure and Addendum. It is so broad that it renders the itemized description of “property under seizure” superfluous. [ 123 ] Moreover, to permit such a broad and sweeping statement to underpin a finding of civil contempt with its punitive aspect is inconsistent with civil contempt principles.

This concern is supported by the potential for criminal charges should Turner not comply as bailee. [ 124 ] There was argument by the parties on Turner’s use of consumables and the need to replace those consumables when called upon to deliver the property under seizure. This may be so where there is a detailed and accurate description of the items in question.

In this situation, the Addendum gives no clear indication of what must be replaced. [ 125 ] Finally, counsel for Kelana argued that Turner had the best knowledge of the personal property on the premises and therefore had the obligation to note down the property which was on the premises at the time the First Notice and Addendum was served.

In other words, which property was under seizure was wholly within the knowledge, and there, the control of Turner. [ 126 ] I find this position inconsistent with a contextual reading of the legislative scheme as a whole, including a reading of the Act , the Regulations , and the Manual. It is the bailiff who is under a duty to complete and serve the seizure documents to ensure a valid seizure under the Act . There is no obligation on Turner to create a parallel list to the Addendum. The obligation Turner had was to safeguard the property under seizure as bailee under the Act .

To fulfill this duty, Turner needed a clear and unequivocal understanding from the seizure documents of which property was under seizure. This information was lacking. 4. Was there a default in delivering the property under seizure within a reasonable time? [ 127 ] The next element of civil contempt under s. 13(2)(

k) requires the person to default in their duty to deliver the property under seizure within a reasonable time when required to do so. [ 128 ] Based on my finding the First Notice and Addendum did not adequately and accurately indicate which property was under seizure, I find that Turner was unable to fully comply with this duty. It should be noted that some of the property under seizure, which was adequately and accurately described, such as the forklift, was delivered up and removed for sale. [ 129 ] It should also be mentioned that this removal of the property was demanded a year after the original seizure.

During this period, Turner carried on business as it was permitted to do. Much can happen in that business over the course of a year, particularly in an autobody business where vehicles are serviced daily. Although there is no time limit on demanding delivery of the property under seizure, the reasonableness of the time it may take for a business to comply may be impacted by the length of time between seizure and removal. 5. Application of the civil contempt principles [ 130 ] As mentioned earlier, s. 13(2)(

k) must be viewed in light of the common law requirements for civil contempt but modified for purposes of that section. [ 131 ] The first element from Carey , requires that the order, in this case the terms of the enforceable duty to deliver the property under seizure pursuant to the seizure documents, must state clearly and unequivocally what must be done. As discussed in the Alran and Masterbuilder decisions, there is a lack of clarity if the order is ambiguous and misses essential details needed to fulfill that directive.

Moreover, the order lacks clarity, and may prove to be equivocal, if it uses over broad language. Finally, external circumstances can obscure the clear meaning of the order. [ 132 ] I find that in these circumstances, the first element of Carey is not fulfilled.

The terms of the duty to deliver property under seizure, flowing from the First Notice and Addendum, lacks clarity as the Addendum misses essential details of which property is under seizure, uses overbroad and vague language in describing that property, and the circumstances of the case itself have further obscured the requirements under that duty. [ 133 ] The description and itemization of the property under seizure used vague terms such as “miscellaneous” without an indication of quantity. The descriptor miscellaneous is attached to broad terms such as tools and parts.

The photographs, intended to elucidate the

details, provided no clarity or assistance as it depicted a jumble of items or a wall of shelving with no sense of what lies within them. [ 134 ] This lack of clarity in the First Notice and Addendum is exacerbated by the circumstances of the case. The bailiff’s seizure of the items was done in a cursory fashion as established by the vague and inaccurate Addendum, and as compared with the second seizure done in December of 2019. Even the Applicant, in the February affidavit, was unable to correctly list and describe the items missing.

Moreover, there is no direct evidence from the bailiff, other than the Bailiff’s Report, which also shows the bailiff had difficulty determining the property under seizure when reviewing the Addendum. [ 135 ] Although the finding on the first element of Carey disposes of the matter, for completeness, I will also make findings on the second and third element from Carey . [ 136 ] I find the second element, requiring actual notice of the terms of the duty to deliver, is unfulfilled.

Although Turner was served with the seizure documents that form the basis of the duty to deliver the seized property, the documents were deficient and inaccurate. They did not fully provide Turner with actual notice of which property was under seizure and therefore what was required to be delivered. [ 137 ] This leads to the third element of civil contempt, which is the intentional failure to comply with the duty to deliver the property under seizure. [ 138 ] In this case, some of the property was in fact delivered and removed for sale. In fact, the sale garnered enough funds to cover the rent arrears.

Although the Bailiff’s Report suggested Jeffry Meyers, on behalf of Turner, was uncooperative when asked of the whereabouts of the miscellaneous items, Turner does not recall this exchange in his Questioning. There is no direct evidence from the bailiff on this issue. I have a reasonable doubt on whether Turner intentionally failed to comply with the duty to deliver the property under seizure established. [ 139 ] Therefore, on the totality of the evidence before me, I find Kelana has not proven beyond a reasonable doubt that Turner intentionally failed to comply with the delivery of the property under seizure.

VII. Conclusion [ 140 ] In light of the findings, the law of civil contempt, and the statutory requirements, the application to declare Turner in civil contempt pursuant to s. 13(2) (

k) of the Act is dismissed. The further application to direct Turner to deliver the missing property under seizure is also dismissed. [ 141 ] If the parties cannot agree on costs, they may be spoken to within 90 days. I thank both counsel for their thoughtful and helpful submissions on this issue. Heard on the 22 nd day of June, 2023. Dated at the City of Calgary, Alberta this 24 th day of August, 2023. Lisa A. Silver J.C.K.B.A. Appearances: Michael C. Kwiatkowski for the Applicant Jason Ingimundson for the Respondents