2022 MBKB 196, 2022 MBKB 196

Date: 20221021 Docket: CI 20-01-27963 (Winnipeg Centre) Indexed as: Sarte Heating v. Mendoza Cited as: 2022 MBKB 196 COURT OF KING’S BENCH OF MANITOBA B E T W E E N: ) APPEARANCES : ) SARTE HEATING & cOOLING LTD., ) RENATO Y.

MAMUCUD plaintiff, ) for the plaintiff ) - and - ) IAN SCARTH ) for the defendant LITO GENER MENDOZA, ) defendant. ) JUDGMENT DELIVERED: ) October 21, 2022 KEYSER J. [ 1 ] The plaintiff, Sarte Heating & Cooling Ltd. (“Sarte”), has filed a motion to find the defendant, Lito Mendoza (“Mendoza”), in civil contempt for failing to comply with a Consent Order granted January 24, 2022 by Master Lee.

For the reasons that follow, the motion is granted. [ 2 ] The affidavit of Sammy Sarte, President of Sarte, affirmed November 30, 2021, sets out that Mendoza had been employed by Sarte in various capacities from 2007 until he was terminated on January 18, 2019 by which time he was the General Manager. Sarte employees were provided with an iPhone for work purposes and given an Apple ID authorization. Mendoza’s was lito.mendoza@sarte.ca . When he was terminated, he was escorted out of the building and never returned.

There is some confusion about whether or not he returned the iPhone at that time, or several days later. In my view, nothing much turns on that. [ 3 ] Since the termination, Mendoza has launched a competing business which Sarte believes has been very successful as a result of using Sarte customer data. For the year 2019, Mendoza’s business, Green Department HVAC Heating, grossed over $700,000.00 (Sarte affidavit at Exhibit B). [ 4 ] Sarte sued Mendoza for return of the client information and a Consent Order was agreed to and signed by Master Lee on January 24, 2022.

The Consent Order includes inter alia the following clauses: 1. THAT Mr. Mendoza and Sarte Heating shall take all reasonable steps, including communicating directly with MNP LLP’s information technologist specialist, Rodney Plunklett [ sic ] (“IT Specialist”), to access the Apple ID account attached to the lito.mendoza@sarte.ca email address (the “Apple ID”); (If the information is able to be accessed, then there are two paragraphs in the Consent Order that set out the way in which that information will be reviewed.) . . . 4.

THAT should the IT Specialist verify that the Apple ID no longer exist [ sic ] or has been irretrievably deleted, such that the information associated with the Apple ID, if any, is no longer accessible, paragraphs 1, 2 and 3 of this Consent Order shall have been satisfied and of no further force nor effect; … [ 5 ] As a result of the Consent Order, Rodney Plunkett (“Plunkett”) was engaged to provide digital forensic services to both counsel.

In the supplementary affidavit of Michelle Sarmiento, affirmed May 12, 2022, can be found the report from Plunkett dated April 6, 2022(Exhibit B). He describes therein the efforts to obtain information from Mendoza and concludes that the iCloud account described in theConsent Order was identified to two devices tied to the account, a personal iPad and Mendoza’s current iPhone. However, collection ofdata connected to the account was unsuccessful as there was no iCloud backup of either device stored in the account. He set out fourpotential scenarios as to explain this result:

i) The iCloud backup was not enabled when the devices were set up; ii) The iCloud backup was disabled more than 180 days ago; iii) The iCloud backup was deleted by Mendoza; or iv) This iCloud account is a secondary account. Devices can be associated to more than one iCloud account and the backups maybe stored in the primary account.

Plunkett went on to indicate that the phone’s name, email address and contents of the iCloud account suggested this was not the iCloudaccount described in the Consent Order. [6] The position of Sarte is that Mendoza should be found in civil contempt as it is obvious that he still has access to the Sartecustomer data and is, in fact, still using that data.

The position of Mendoza is that by providing the information and access to theaccount, that he has done everything possible to cooperate and, thereby, has satisfied the terms of the Consent Order which was to takeall “reasonable” steps to access the information. [7] Queen’s Bench Rules 60.10(1) (now King’s Bench Rules 60.10(1)) provides as follows: 60.10(1) A contempt order to enforce an order requiring a person to do

an act, other than the payment of money, or to abstainfrom doing

an act, may be obtained only on motion to a judge in the proceeding in which the order to be enforced was made. [8] The Supreme Court of Canada in Carey v. Laiken, 2015 SCC 17 , outlined the elements of civil contempt.

It states: [32] Civil contempt has three elements which must be established beyond a reasonable doubt…These three elements, coupledwith the heightened standard of proof, help to ensure that the potential penal consequences of a contempt finding ensue only inappropriate cases… [33] The first element is that the order alleged to have been breached “must state clearly and unequivocally what should andshould not be done”… [34] The second element is that the party alleged to have breached the order must have had actual knowledge of it… [35] Finally, the party allegedly in breach must have intentionally done the act that the order prohibits or intentionally failed to dothe act that the order compels: Sheppard v.

Sheppard (1976), (ON CA)… [9] The first element is a requirement that the breached order state clearly and unequivocally what should and should not be done. There is no ambiguity in the Order to which Mendoza consented that he “shall” take all reasonable steps to access the Apple ID attachedto the lito.mendoza@sarte.ca email address. The conclusions of Plunkett indicate that Mendoza has not taken all reasonable steps tomake the information available.

I base this as well on the factors set out later under the third part of the contempt test in para. 11 of thisdecision, and as a result, am satisfied of this step beyond a reasonable doubt. [10] The second step requiring Mendoza to have actual knowledge of the production order is also clearly satisfied beyond areasonable doubt as it was a Consent Order prepared by his counsel and signed by counsel for both parties. [11] Finally, the last element requires proof beyond a reasonable doubt that Mendoza intentionally failed to do what the productionorder compels.

I am satisfied that Mendoza has intentionally failed to do what the production order requires because he currently hasaccess to the Sarte information and has not made access to it possible. I find this for a number of reasons:

i) Mendoza gave inconsistent answers at his examinations for discovery in terms of what he did with the confidential Sarteinformation tied to the Apple account. At his examination for discovery held August 20, 2021, he swore that when he left theemployment of Sarte that he backed up the information on Sammy Sarte’s computer. However, in his continued examination fordiscovery held October 12, 2021, he maintained that he did not back it up anywhere.

He also agreed that he surrendered the businessiPhone the same day he was terminated by Sarte and that the physical data on the iPhone had been erased; ii) Mendoza was able to access saved messages tied to the Apple ID in 2021, some two years after he left the employment of Sarteand he could not explain where those messages came from. Mendoza created screenshots in 2021 from messages generated betweenhimself and Sarte from 2019. Some of these are found in the Sarte affidavit, at Exhibit D.

Mendoza would have had to have had accessto the Apple ID to retrieve this data; iii) He made purchases from the Apple ID after the iPhone was supposedly surrendered with its information intact. Some of thesepurchases are found in Exhibit I of the Sarte affidavit; iv) Mendoza has contacted a number of Sarte’s customers and has access to their contact information (Sarte affidavit at Exhibit F). Mendoza’s only explanation for having this contact information was to say he did not remember how he came to have that in hispossession. This assertion lacks any credibility;

v) Plunkett’s report suggests that Mendoza has not provided the appropriate iCloud account. In Mendoza’s affidavit swornSeptember 2, 2022, he swears he did not delete the data associated with the Apple ID. Exhibit 3 to that affidavit is information received

by counsel for Sarte from Apple Support that says the Apple ID itself was either deleted, renamed with the existing data preserved, ordisabled. In his affidavit sworn December 23, 2021, Mendoza confirmed both personal and business use on the Apple account. At para.10 he further confirms that his personal cell was linked to the Apple ID following termination; and vi) Most damning of all is information contained in Mendoza’s own affidavit sworn September 2, 2022 in Exhibit 17. This is anemail from Plunkett to both counsel. Several of the interactions are telling.

The conversation between Mendoza and Plunkett on March25, 2022 was as follows: Timeline . . . 25 Mar 2022 9:00 AM Mr. Mendoza and I spoke for about 30 min, but no collection was undertaken. Mr. Mendoza initially providedthe same email address lito.mendoza@sarte.ca. This surprised me since I thought it was made clear to him through counsel that thisaccount is no longer accessible. I asked him about whether he migrated any data from the Sarte phone to his new one, which he said hegot about a week after leaving Sarte. Mr.

Mendoza said he did not use any methods to migrate data from the Sarte phone to his new one.I asked him if he just gave up all his data and started his new phone from scratch and he said yes, which also struct [sic] me as very oddsince the iCloud backup service was enabled and it would be a considerable inconvenience at best and a significant loss of data at worst.He said that he was using his Sarte phone for both business and personal purposes. Mr. Mendoza mentioned photos he did not want Sarteto have. I explained that it why MNP is engaged as a third party so that his privacy interests are protected.

These photos would almostcertainly be lost unless iCloud was used to back them up. I asked him if he would let MNP collect his current iCloud account so that wecan be sure that nothing was migrated from his previous phone but he said he would want to consult with counsel first, citing his newphone is tied to his new business. . . . At the end of the email, Plunkett sets out what he refers to as “inconsistencies”: Inconsistencies Mr. Mendoza said during our 25 Mar call that he had used his Sarte iPhone for both personal and business use.

When I reviewed thecontents of the iCloud account, the account was almost completely empty (0.2 GB of 5.0 used), so there was almost no content overwhich Mr. Mendoza should have any privacy concerns. There were almost no photos in the iCloud account, which is also not consistent with his statements about personal/family photos he wasconcerned about Sarte seeing. He said he did not use any methods to migrate his data to a new phone, so assuming he used his Sartephone to take family / personal photos, all of them would have been lost to him.

The iCloud account he provided had an iPhone whose IMEI did not match the IMEI of the phone that was in the Rogers billing recordprovided by Sarte that he purchased shortly after he left. His explanation was it was damaged in a car accident. The iPhone was named after his Son “Abijah’s iPhone” and the email address used as the iCloud identifier Liam_abijah22@icloud.comwas also contained his Son’s name. I’ve examined dozens of devices and I do not recall seeing a phone setup where the user’s name andemail are not used as identifiers.

As a result, I am satisfied beyond a reasonable doubt that Mendoza continues to have access to the Sarte information, and has transferredit to a new device for which he is not providing a password. Mendoza will be found in civil contempt for all of these reasons. [12] The remedy for a finding of civil contempt can include financial penalties, or the striking of pleadings. In Fresno PacificUniversity Foundation v. Grabski et al., 2015 MBCA 70 , the Manitoba Court of Appeal indicated: [16] There is a difference between a finding of contempt and the imposition of a sanction for it.

Sometimes the distinction isreferred to as the liability stage and the sanction stage. At the liability stage, the Supreme Court of Canada has recently confirmed inCarey v.

Laiken, 2015 SCC 17 at paras. 33-35, that the elements of civil contempt of court are: the order alleged to have been breachedmust state clearly and unequivocally what should and should not be done; the party alleged to have breached the order must have hadactual knowledge of it; and the party allegedly in breach must have intentionally done the act that the order prohibits or intentionallyfailed to do the act that the order compels…. [17] A finding of persistent or spiteful conduct is not necessary…. . . . [21] Thus, in determining civil contempt, one does not have to prove persistent conduct to show intention to breach an order.

TheSupreme Court of Canada in Carey confirmed that the intention required for civil contempt is the intention to commit the act inquestion. There is no requirement that it be proven that the alleged contemnor knew the act was prohibited and deliberately chose to doit anyway. When dealing with an omission, as in this case, the party seeking a finding of contempt must prove no more than thedefendant consciously omitted to do what was required…. [13] The remedies that are appropriate would be fines levied under Rule 60.10(5) or the striking of pleadings pursuant to Rule

30.08(2) which provides: 30.08(2) Where a party fails to serve an affidavit of documents or produce a document for inspection in compliance with these rules or fails to comply with an order of the court under rules 30.02 to 30.11, the court may, (

a) revoke or suspend the party’s right, if any, to initiate or continue an examination for discovery; (

b) dismiss the action, if the party is a plaintiff, or strike out the statement of defence, if the party is a defendant; and (

c) make such other order, including a contempt order, as is just. [ 14 ] Similarly, in Rule 60.11, the Rules states: 60.11 Where a party fails to comply with an interlocutory order, the court may, in addition to any other sanction provided by these rules, (

a) stay the party’s proceeding; (

b) dismiss the party’s proceeding or strike out the party’s defence; or (

c) make such other order as is just. [ 15 ] I have found deliberate misconduct and failure to comply with the Consent Order entered into many months ago. Mendoza will be given an opportunity to purge his contempt in the following way. I am ordering that the proper Apple ID and password allowing access to the Sarte data in the Cloud be provided to Plunkett within two weeks of receipt of this decision for extraction of that information, failing which the pleadings of Mendoza will be struck. [ 16 ] Costs will be granted to Sarte. __________________________ J.