Michelle Jane Peddle Applicant And: Leslie (Junior) Peddle Respondent, 2019 NLSC 130

court crest IN THE SUPREME COURT OF NEWFOUNDLAND AND LABRADOR GENERAL DIVISION Citation : Peddle v. Peddle , 2019 NLSC 130 Date : July 5, 2019 Docket : 201502F0956 Between: Michelle Jane Peddle Applicant And: Leslie (Junior) Peddle Respondent Before: Justice Katherine O'Brien Place of Hearing: Grand Bank, Newfoundland and Labrador Date of Hearing: May 24, 2019

Summary: The Applicant applied for contempt of court and other relief against the Respondent for failure to comply with a consent order in respect to business assets. The Respondent was found in contempt. The other relief was denied. Appearances: Jean V. Dawe, Q.C. Appearing on behalf of the Applicant Thomas F. Hutchings Appearing on behalf of the Respondent

Authorities Cited: CASES CONSIDERED: Hynes v. Suncor Energy Inc., 2016 NLTD(G) 117; Carey v. Laiken, 2015 SCC 17; Freedom Villages Inc. v.Gander (Town), 2008 NLTD 116; Meadus v. Meadus, 2011 NLTD(F) 32; Salloum v. Salloum, (AB KB), [1994]A.W.L.D. 446, 154 A.R. 65, (A.B.Q.B.) RULES CONSIDERED: Rules of the Supreme Court, 1986, S.N.L. 1986, c. 42, Sch.D. TEXTS CONSIDERED: J. Derek Green and Christopher Curran, Practice and Procedure (St.

John's: Law Society of Newfoundlandand Labrador, 2010) REASONS FOR JUDGMENT O'Brien, J.: INTRODUCTION [1] This decision primarily concerns an application by Michelle Peddle, now Michelle Penney, to find her former husband, Leslie(Junior) Peddle, in contempt of court. [2] The parties entered an order by consent in their family law dispute with respect to business assets on November 28, 2018 (the“Consent Order”). The Consent Order includes the following provisions: THAT the Respondent (Mr. Peddle) shall pay to the Applicant (Ms.

Penney) the sum of Three Million Dollars ($3,000,000.00) after tax,in full and final settlement of all claims of the Applicant to business assets, together with the chattels referenced in paragraphs 3 & 4below. THAT the aforesaid $3,000,000.00 shall be paid as follows: $150,000.00 on or before the 28th day of December 2018; $150,000.00 on or before the 25th day of January 2019; $1,5000,000.00 on or before the 25th day of February 2019 together with interest at two percent (2%) per annum calculated from the26th day of November 2018.

The balance of $1,200,000.00 shall be paid in full on or before the 6th day of January 2022. The Respondent shall make minimumannual payments of principal of four hundred thousand dollars ($400,000.00) on or before the 6th day of January in each of the years2020 and 2021. Interest on the highest amount outstanding of the aforesaid $1,200,000.00, during each quarter from the 26th day ofNovember 2018 shall be paid on the 6th days of April, July, October and January in the years 2019 and 2020 at the rate of four (4%) perannum.

THAT as security for the payment of the $3,000,000 aforesaid, the Respondent shall provide a Letter of Credit in a form satisfactory tothe Applicant from a

Schedule One Canadian Chartered Bank, for the amount outstanding from time to time, and in addition shall Pledgeall his shares in each of 56557 Newfoundland and Labrador Limited and BANA Properties Inc., pursuant to a Pledge Agreement in formsatisfactory to the Applicant and with delivery of the said Share Certificates to Applicant's counsel. [3] Ms. Penney alleges that Mr. Peddle has not complied with the Consent Order in the following respects:

a) he has not paid the $1,500,000.00 plus interest due on or before February 25, 2019;

b) he has not paid the interest due on April 6, 2019;

c) he has not provided a Letter of Credit (in any form) from a

Schedule One Canadian Chartered Bank; and

d) he has not entered a Pledge Agreement nor delivered the Share Certificates to Ms. Penney's counsel. [ 4 ] Ms. Penney has made three applications in relation to these facts: 1. An Interim Application Inter Partes (the “First Application”) (which was initially filed on an emergency basis but set down by the judge who reviewed it for a non-emergency hearing) which seeks a variety of orders including:

a) that the Share Certificates be delivered to Ms. Penney's counsel within 24 hours;

b) that all assets of 56557 Newfoundland and Labrador Limited, BANA Properties Inc. and Clarenville Ford Sales Ltd. be frozen;

c) attachment of proceeds of the sale of the shares or assets of these companies; and

d) provision of details about any communications that Mr. Peddle has had about the sale of shares or assets of these companies, except in the ordinary course of business, and the parties involved. 2. An Interim Application Ex Parte seeking leave to make an application for contempt (the “Leave Application”). 3. An Interim Application Inter Partes seeking that Mr. Peddle be held in contempt of the Consent Order (the “Contempt Application”). [ 5 ] By agreement of the parties and their counsel, these applications came before me for hearing on May 24, 2019.

At that time, I heard evidence and argument on all three applications, including the Leave Application, without having made an order granting leave. I then reserved my decision on all three, with the understanding that if leave was not granted, then I would give no further consideration to the Contempt Application. [ 6 ] Although an application for leave may be granted ex parte prior to the filing of an application for contempt, in the present case counsel for Ms. Penney advised that she would be filing both applications related to contempt when we were present in Court with Mr.

Peddle's counsel setting dates for the First Application. As the First Application and the Contempt Application arise from the same facts, for efficiency we set a date then to deal with all three. ISSUES [ 7 ] I will deal with the issues arising from the three applications in the following order:

a) Should the Leave Application be granted?

b) Should Mr. Peddle be found in contempt of the Consent Order?

c) Should additional orders be made as requested in the First Application regarding the shares and assets of the companies in question? LEAVE FOR CONTEMPT [ 8 ] Rule 53 of the Rules of the Supreme Court, 1986 , S.N.L. 1986, c. 42, Sch.D . (“ Rules ”) deals with contempt orders. Rule 53.02 addresses applications for leave: 53.02.

(1) An application shall not be made to the Court for a contempt order unless the Court on an ex parte application first grants leave to make the application.

(2) An application for an order granting leave under rule 53.02(1) shall be supported by an affidavit setting out (

a) the name, address and description of applicant; (

b) the name, address and description of the person sought to be committed; and

(

c) the facts in support of the grounds on which the contempt order is sought.

(3) On the hearing of an application under rule 53.02(1), the Court may (

a) order the application for a contempt order and any supporting affidavit to be served upon any person sought to be committed at least five days before the hearing, or as the Court otherwise orders; (

b) dispense with service on any person of the application and any supporting affidavit; or (

c) order service of the application and any supporting affidavit to be made by alternative service in accordance with rule 6.03 or substituted service in accordance with rule 6.04.

(4) Unless the Court otherwise orders, an order granting leave under rule 53.02(1) shall lapse unless the application is personally served upon any person sought to be committed within twenty days from the date of the granting of the order.

(5) A refusal of the Court to grant leave under rule 53.02(1) shall not prevent an applicant from subsequently making a fresh application to the Court for such order. [ 9 ] Ms. Penney's application for leave was supported by a detailed affidavit that met the requirements of Rule 53.02(2), with the exception that neither her address nor that of Mr. Peddle were included. However, as this was an Interim Application in the proceeding and the addresses of the parties are already on record with the Court, this is a technical irregularity only and I find her application to be compliant with Rule 53.02(2).

The application and supporting affidavit were also served upon counsel for Mr. Peddle. [ 10 ] What is the test for granting leave for a Contempt Application? In Hynes v. Suncor Energy Inc. , 2016 NLTD(G) 117, Hall J. cited J. Derek Green and Christopher Curran, Practice and Procedure (St. John's, NL: Law Society of Newfoundland and Labrador, 2010) at 53-10, wherein it is outlined that before granting leave for a contempt application, the Court should be satisfied that:

a) the application is made bona fide and not for some ulterior or improper purpose;

b) that the alleged contemnor is aware of the existence of the court order which allegedly has not been complied with; and

c) that there is some evidentiary basis for believing that there has been a breach of the order in question and the matter is not de minimus . [ 11 ] I will apply the same test. In part (

a) of the test, “ bona fide ” generally means honestly, genuinely or in good faith. In part (

c) of the test, “ de minimus ” generally means so insignificant that a court may overlook it. [ 12 ] There is nothing in Ms. Penney's application to suggest that it is made for any ulterior or improper purpose. The supporting affidavit sets out in some detail the efforts that her lawyer has made seeking compliance with the Consent Order. I will review this evidence in more detail below but for the purpose of the application for leave, there is ample evidence to satisfy me that the application is made honestly, genuinely and in good faith. [ 13 ] I am also satisfied that Mr.

Peddle is aware of the existence of the Consent Order as it is signed by both him and his legal counsel. [ 14 ] Finally, the supporting affidavit establishes some evidentiary basis for believing that there has been a breach of the Consent Order as Ms. Penney attests that Mr. Peddle has not paid the $1,500,000.00 payment due on February 25, 2019 or the interest payment due on April 6, 2019, and he has failed to deliver a Letter of Credit or the Share Certificates. Certainly, the amounts in question here are substantial and the matter is not so insignificant that a court should overlook it. [ 15 ] Mr.

Peddle's counsel did not make any arguments specific to the matter of leave, although he had the opportunity to do so. [ 16 ] I am satisfied that the Leave Application should be granted. CONTEMPT APPLICATION [ 17 ] The Supreme Court of Canada reviewed the law of civil contempt in Carey v. Laiken , 2015 SCC 17 . Civil contempt has three elements which must be established beyond a reasonable doubt. The first is that the order alleged to have been breached must state clearly and unequivocally what should and should not be done.

The second element is that the party alleged to have breached the order must have actual knowledge of it. The third is that the party allegedly in breach must have intentionally done the act that the order prohibits or intentionally failed to do the act that the order compels. I will review each of these elements in turn. Clear and Unequivocal [ 18 ] The payment terms of the Consent Order are clear and unequivocal. The amounts due to Ms. Penney by Mr.

Peddle, the dates payments are due, the applicable interest rate, and the dates from which interest will apply, are all set out straightforwardly in the Consent Order.

[ 19 ] Mr. Peddle did not argue that these sections are unclear or that he is uncertain of his obligation pursuant to them. On the contrary, from his two affidavits filed (sworn May 9 and May 22, 2019) and on cross-examination on his affidavits, it is established beyond a reasonable doubt that Mr. Peddle understood what his payment obligations were under the Consent Order. His defence to contempt is that he had a reason for his non-compliance. That defence will be canvassed below. [ 20 ] In addition to the payment terms, there are two further parts of the Consent Order to consider. The first requires Mr. Peddle to provide a Letter of Credit in a form satisfactory to Ms. Penney from a

Schedule One Canadian Chartered Bank, for the amount outstanding from time to time. This

section is clear and unequivocal on its face as to what is required of Mr. Peddle. There is no evidence that Mr. Peddle does not understand or is unclear as to the meaning of a Letter of Credit or a

Schedule One Canadian Chartered Bank. These are common terms in the world of financing and Mr. Peddle is an experienced business man who reviewed and signed the Consent Order with assistance of legal counsel. [ 21 ] Likewise, the second part which requires Mr. Peddle to pledge his shares in each of 56557 Newfoundland and Labrador Limited and BANA Properties Inc., pursuant to a Pledge Agreement in a form satisfactory to Ms. Penney and with delivery of the Share Certificates to her legal counsel, is clear and unequivocal as to what is required of Mr. Peddle. There is no evidence Mr.

Peddle does not understand his obligations or finds the wording unclear or equivocal as to what he is required to do. [ 22 ] There is one detail missing from this

section of the Consent Order - it does not specify a time for compliance. Ms. Penney’s counsel relies on Rule 49.06 which states: 49.06. Unless the Court otherwise orders, an order shall be dated and take effect on the date it is pronounced, given or made; provided that, by leave of the Court, an order may be ante-dated or post-dated. [ 23 ] Under cross-examination, Mr. Peddle stated that no timeline for compliance had been discussed to his recollection. He acknowledged that the purpose of this

section of the Consent Order was to secure his payment obligation. Ms. Penney’s counsel argues that the obvious inference from this is that December 28, 2018, the due date of the first payment, was the absolute deadline for compliance. [ 24 ] Mr. Peddle did not defend this Application with an assertion that he was unclear as to when his obligations arose. His counsel acknowledged that as the Consent Order is silent as to time, it is “probably forthwith”.

I will discuss the meaning of “forthwith” below. [ 25 ] Rule 46.06 operates to make orders effective immediately upon pronouncement unless the Court specifies otherwise. Mr. Peddle’s obligations under the Consent Order arose immediately upon its taking effect except where other compliance dates were specified. Practically speaking, however, it can take some time to comply with Court orders. In the present case, it would be unreasonable to require that a Letter of Credit be produced on the date of the Consent Order or that a Pledge Agreement terms be agreed on that day. [ 26 ] In Freedom Villages Inc. v.

Gander (Town) , 2008 NLTD 116 , the Court considered contempt of an order that specifically required a permit to be issued “forthwith”. Green, C.J.T.D., as he then was, gave consideration to that word, writing at paragraph 86: 86 The meaning to be ascribed to the word forthwith, in the context of an obligation to comply with a court order, will therefore depend upon the circumstances under which the order arose and must allow to the person who must comply with its provisions a reasonable time to effect such compliance in a lawful and proper way.

Beyond that, no further delay will be countenanced [ 27 ] Although the Consent Order does not use the word “forthwith”, given that the Consent Order took effect on November 28, 2018 and Mr. Peddle’s obligation under it arose immediately on that day, I find the above reasoning to be equally applicable. Mr. Peddle should be given a reasonable time to comply in the circumstances. [ 28 ] In Freedom Villages , Green, C.J.T.D., also gave consideration to Rule 49.06, although with respect to the alleged contemnor’s notice of the order, not the time for compliance.

At paragraph 136, he wrote: 136 While Rule 49.06 provides that unless the court otherwise orders, an order shall be dated and take effect on the date it is pronounced, given or made, that does not obviate the necessity of proving, for the purposes of a contempt charge, that the alleged contemnors knew what it was they were being required to do by the order… [ 29 ] In this case, I find beyond a reasonable doubt that Mr. Peddle knew what this

section of the Consent Order required him to do and that he was required to do it forthwith, that is, without delay other than as reasonable in the circumstances. Actual Knowledge [ 30 ] Mr. Peddle had actual knowledge of the Consent Order. He signed it and he acknowledged that he was present when it was read into the record in Court. Intentional Inaction [ 31 ] The element of intent was considered by the Supreme Court of Canada in Carey at paragraphs 38 to 43 .

All that is required is proof beyond a reasonable doubt of an intentional act or omission that is in breach of a clear order of which the alleged contemnor has notice. It is not required to establish that the alleged contemnor intended to breach or disobey the order.

The intention to disobey authority, sometimes referred to as “contumacious intent”, does not need to be proven. 38 It is well settled in Canadian common law that all that is required to establish civil contempt is proof beyond a reasonable doubt of an intentional act or omission that is in fact in breach of a clear order of which the alleged contemnor has notice: Prescott-Russell, at

para. 27; College of Optometrists, at para. 71; Sheppard, at p. 8; TG Industries, at paras. 17 and 32; Bhatnager, at pp. 224-25, Sharpe, at ¶ 6.190. The Court of Appeal followed this approach. As it noted, to require a contemnor to have intended to disobey the order would put the test "too high" and result in "mistakes of law [becoming] a defence to an allegation of civil contempt but not to a murder charge" ( 2013 ONCA 530 (Ont. C.A.), at para. 59 ).

Instead, contumacy or lack thereof goes to the penalty to be imposed following a finding of contempt: para. 62; see also Sheppard and Sharpe, at ¶6.200. 39 The appellant submits, however, that in situations in which the alleged contemnor cannot "purge" the contempt, is a lawyer or is a third party to the order, the intent to interfere with the administration of justice must be proved. I understand this to mean that "the intention to disobey, in the sense of desiring or knowingly choosing to disobey the order" must be established: TG Industries, at para. 17.

This is sometimes also referred to as "contumacious" intent. 40 The appellant submits that the mental element of civil contempt must address at least one of the two goals of civil contempt: securing compliance with court orders or protecting the integrity of the administration of justice. Finding a party in contempt where he or she cannot purge (either because the act that constituted the contempt cannot be undone or because a conflicting legal duty prevents compliance with the order) furthers neither of these goals absent some heightened mental element for contempt.

Only if the person is shown to have had the intent to interfere with the administration of justice would one of these purposes — protecting the integrity of the administration of justice — be served. 41 I cannot accept this position. There is no principled reason to depart from the established elements of civil contempt in situations in which compliance has become impossible for either of the reasons referred to by the appellant.

Where, as here, the person's own actions contrary to the terms of a court order make future compliance impossible, I fail to see the logic or justice of requiring proof of some higher degree of fault in order to establish contempt. The appellant's submission also overlooks the point that one of the purposes of the contempt power is to deter violations of court orders, thereby encouraging respect for the administration of justice. It undermines that purpose to treat with special charity people whose acts in violation of an order make subsequent compliance impossible.

It seems to me that the existing discretion not to enter a contempt finding and the defence of impossibility of compliance provide better answers than a heightened degree of fault where a party is unable to purge his or her contempt for the reasons the appellant outlines: Jackson at para. 14; Sussex Group Ltd. v. Fangeat (2003), 42 C.P.C. (5th) 274 (Ont. S.C.J.), at para. 56 . 42 The appellant correctly notes that civil contempt is quasi-criminal in nature, which he says justifies a higher fault element where contempt cannot be purged.

But civil contempt is always quasi-criminal, so this provides no justification for carving out a distinct mental element for particular types of civil contempt cases. As I have already discussed, requiring contumacious intent would open the door to mistakes of law providing a defence to an allegation of civil contempt.

It could also permit an alleged contemnor to rely on a misinterpretation of a clear order to avoid a contempt finding, which would significantly undermine the authority of court orders. 43 Further, adopting the appellant's proposal would in effect make the required mental element dependent on the nature of the order alleged to have been breached.

Those who breach a prohibitory order would benefit from this heightened mental element disproportionately, due to subsequent impossibility of compliance, as compared to those who breach a mandatory order, with which the alleged contemnor will be able to subsequently comply absent a conflicting legal duty. I see no principled basis for creating this distinction. [ 32 ] In the present case, therefore, what must be established beyond a reasonable doubt is:

a) Mr. Peddle has intentionally omitted to pay Ms. Penney $1,500,000.00 plus interest due on or before February 25, 2019;

b) Mr. Peddle has intentionally omitted to pay Ms. Penney the interest due on April 6, 2019;

c) Mr. Peddle has intentionally failed to provide Ms. Penney a Letter of Credit (in any form) from a

Schedule One Canadian Chartered Bank; and

d) Mr. Peddle has intentionally failed to enter a Share Pledge Agreement and deliver the Share Certificates to Ms. Penney's counsel. MR. PEDDLE’S DEFENCE [ 33 ] It is helpful to examine Mr. Peddle’s defence in some detail. [ 34 ] Mr. Peddle owns 50 percent of the shares of BANA Properties Ltd. and 51 percent of the shares of 56557 Newfoundland and

Labrador Ltd. The other owner is Stephen Lewis. 56557 Newfoundland and Labrador Ltd. is the 100 percent shareholder of Clarenville Ford Sales Limited (“Clarenville Ford”). [ 35 ] On January 23, 2019, two days before the second $150,000.00 payment was due, Mr. Peddle’s lawyer wrote Ms. Penney’s lawyer to advise that Mr. Peddle and Mr. Lewis had decided to sell Clarenville Ford and had signed a term sheet with a potential purchaser with a closing date of February 28, 2019, which was three days after the $1,500,000.00 payment was due. In the letter, Mr. Peddle proposed amending the payment

schedule of the Consent Order so that $2,800,000.00 plus interest of two percent per annum from November 26, 2018 be paid in full on closing. [ 36 ] On January 24, 2019, Mr. Peddle received a proposed Share Pledge Agreement from Ms. Penney. There is no evidence that he or his counsel responded to this draft. [ 37 ] By February 6, 2019, Mr. Peddle knew that the deal contemplated in the term sheet had fallen through. He confirmed this under cross-examination. However, he did not communicate this to Ms. Penney or her counsel at the time. He and Mr.

Lewis still wanted to sell Clarenville Ford and so, on February 6, 2019, they entered an engagement letter with Confederation M&A for the sale of the business. Essentially, the terms of engagement were that Confederation M&A would use its best efforts to find a buyer for the business. At this point, there was no buyer and no deal. [ 38 ] In February 2019 and after, Ms. Penney through her counsel continued to ask for delivery of the payments due and the security. [ 39 ] On February 19, 2019, Mr. Peddle’s lawyer proposed to Ms. Peddle’s lawyer that Mr.

Peddle and 56557 Newfoundland and Labrador Ltd. provide an irrevocable assignment of proceeds as security for the amount owing. A draft was provided that did not identify the potential purchaser or include an acknowledgement from the potential purchaser or the other shareholder. It was not acceptable to Ms. Penney. [ 40 ] On February 22, 2019 the second $150,000.00, which had been due on January 25, 2019, was paid. [ 41 ] On February 26, 2019, Mr. Peddle’s lawyer advised Ms. Penney’s lawyer that Mr. Peddle was “meeting with the bank regarding the Letter of Credit”. Mr.

Peddle acknowledged under cross-examination that he knew by this date that Ms. Penney was not accepting any delay for delivery of the Letter of Credit, the payments or the Share Certificates. At this point, the $1,500,000.00 was past due. [ 42 ] Mr. Peddle acknowledges that the money has not been paid and neither the Letter of Credit nor the Share Certificates have been delivered. He acknowledges that Ms. Penney has not agreed to vary the Consent Order.

His reason for non-compliance is that he wants to sell Clarenville Ford and he does not want to complicate that sale by “overlapping the processes” of the potential sale and compliance with the Consent Order. He testified that if a deal comes through, he wants to have a “smooth transition”. [ 43 ] Mr. Peddle considers a sale of Clareville Ford as a “win-win” for him and Ms. Penney. The win to her being that she would be paid the full amount she is owed prior to January 6, 2022, which is the date of the final payment in the Consent Order. Yet Mr.

Peddle acknowledged under cross-examination that there is still no deal in place. [ 44 ] Mr. Peddle has not provided evidence of any serious effort made to secure a Letter of Credit. In his affidavit sworn May 22, 2019, Mr. Peddle attests that he believed that the Letter of Credit would not be necessary as the sale would have been completed with the first potential buyer. That is the deal that fell through prior to February 6, 2019. As referenced above, a letter from his lawyer on February 26, 2019 stated that Mr. Peddle was “meeting with the bank regarding the Letter of Credit”. No further evidence of Mr.

Peddle’s efforts to secure a Letter of Credit was offered. [ 45 ] When questioned under cross-examination about efforts to get the Letter of Credit, Mr. Peddle stated that he had met with Don Devereaux of Scotiabank at some point and Mr. Devereaux had suggested getting updated appraisals on some of the business assets which had last been appraised in 2017. It is not clear that these suggested appraisals were in support of a Letter of Credit. From the emails filed, it appears that Mr. Peddle requested to meet with Mr.

Devereaux on April 24, 2019, “to further our conversation about my personal matters as it relates to Michelle” and, on May 1, 2019, he contacted Mr. Devereaux about a non-revolving term loan. [ 46 ] In his affidavit sworn May 22, 2019, Mr. Peddle addresses his efforts to get financing. He states: That I have been in discussions with Scotiabank regarding financing to pay the amount owing to the Applicant. That I have also had discussions with RoyNat. That both Scotiabank and RoyNat had concerns about proceeding with financing if a sale of Clarenville Ford Limited was pending.

That it is still my intention to proceed with sale of shares of Clarenville Ford and/or the assets of BANA Properties. That myself and Mr. Lewis are still engaged in ongoing discussions with Confederation M&A. That Confederation M&A have indicated to me that a sale could be completed within the next 30-60 days. [ 47 ] Mr. Peddle filed an email dated May 16, 2019 to him from Nick Collingwood at RoyNat copied to Don Deavereaux and one other person. The email addresses his request to RoyNat for $1,000,000.00 of financing. In the email, Mr.

Collingwood is seeking to confirm financing terms prior to proceeding “with a formal “Preliminary Assessment” to engage internal partners to get authorization to present an actual Discussion Paper”. At this time, it appears that Mr. Peddle’s request had not yet been given even a preliminary assessment. ASSESSMENT OF MR. PEDDLE’S ACTIONS AND OMISSIONS [ 48 ] The evidence before me establishes beyond a reasonable doubt that Mr. Peddle’s failure to pay the monies due, deliver the

Share Certificates and obtain a Letter of Credit has been intentional. [49] He has not complied with the Consent Order because he would prefer to sell Clarenville Ford and pay Ms. Penney in full fromthe proceeds of the sale. He acknowledges that Ms. Penney has not agreed to amend the Consent Order to delay payment until thebusiness is sold. Under cross-examination, he confirmed that prior to the Consent Order being entered, during negotiations, he proposedto Ms. Penney delaying payment until the business was sold. He testified that the proposal was rejected by Ms.

Penney at the time andwas not included in the Consent Order. [50] Mr. Peddle has admitted that he has the Share Certificates and there is nothing preventing their delivery. A Share PledgeAgreement satisfactory to Ms. Penney has been delivered to his lawyer. [51] Mr. Peddle has not provided evidence to show that he is unable to make the payments. He has submitted some of evidence ofseeking financing but it is recent (May 16, 2019), preliminary and for less than the amount due Ms. Penney. [52] Mr. Peddle has not provided evidence of any serious efforts to obtain a Letter of Credit.

A Letter of Credit is ultimately in thecontrol of a third party, a

Schedule One Canadian Chartered Bank. Mr. Peddle should not be found in contempt for a failure of a thirdparty to act. However, this is not a case of Mr. Peddle being denied a Letter of Credit after having taken reasonable steps to secure one. Ifind that he has not been reasonable in his efforts and that he has intentionally not acted to get a Letter of Credit because he wants to sellhis business and has focused his efforts on that. CONCLUSION ON THE ELEMENTS OF CONTEMPT [53] Based on the above, I find that all elements for a finding of civil contempt have been established beyond a reasonable doubt.

Discretion of the Court [54] Even though the elements of civil contempt has been established, the contempt power is discretionary and courts haveconsistently discouraged its routine use to obtain compliance with court orders. The discretionary nature of the power is discussed inCarey at paragraphs 36 and 37.

Paragraph 37 states: 37 For example, where an alleged contemnor acted in good faith in taking reasonable steps to comply with the order, the judgeentertaining a contempt motion generally retains some discretion to decline to make a finding of contempt: see, e.g., Morrow, Power v.Newfoundland Telephone Co. (1994), (NL CA), 121 Nfld. & P.E.I.R. 334 (Nfld. C.A.), at para. 20; TG Industries, atpara. 31.

While I prefer not to delineate the full scope of this discretion, given that the issue was not argued before us, I wish to leaveopen the possibility that a judge may properly exercise his or her discretion to decline to impose a contempt finding where it would workan injustice in the circumstances of the case. [55] In family law matters, the Court’s discretion to find contempt should be exercised sparingly (see Meadus v. Meadus, 2011NLTD(F) 32, upheld at Meadus v. Meadus, 2013 NLCA 59). The reason for this cautionary approach in family law is primarily becausethe best interest of children is often involved.

As stated by Justice Veit in a frequently cited passage of Salloum v. Salloum , (AB KB), [1994] A.W.L.D. 446, 154 A.R. 65, (A.B.Q.B.): However, by long tradition, the court exercises restraint in family law cases. In custody cases, the court usually requires an intentionalbreach of the court order: […]. The reasoning in these cases, which reasoning I adopt, is that restraint is appropriate, given the twinobjectives of protecting both the best interests of the children and the administration of justice.

As frustrating as it must be for a parentwhose court ordered access is sterilized, the court's focus is on the interests of the children, not on the behaviour of parents. Children arebetter off if their parents are not in jail or paying fines. Where the court can find that a parent is disobeying a court order out of honestconcern for the welfare of the children, a court will be loathe to stigmatize and sanction the parent's behaviour. [56] In the present case, there are no children involved and so the need for caution is not as pronounced.

Also caution or restraintdoes not mean that a finding of contempt will not at times be appropriate. As stated by Justice Blair in Surgeoner v. Surgeoner, [1992]W.D.F.L. 4941, 31 A.C.W.S. (3d) 1247, at paragraph 6: 6 The need for the sanction of contempt proceedings is of significant importance in the field of family law.

There is an undertow ofbitterness and sense of betrayal which often threatens to drown the process and the parties themselves in a sea of anger and "self-rightness." In this environment it is all too easy for a spouse to believe that he or she "knows what is right," even after a matter has beendetermined by the court, and to decide to ignore, disobey or defy that determination. [57] While there is no evidence that Mr.

Peddle has been motivated by bitterness or any sense of betrayal or anger, I find that he hasbeen motivated by a belief that “he knows what is right” and even after the matter has been determined by Court order, he has decided toignore that determination and proceed as he sees fit. I see no reason here why he should not be found in contempt. Mr. Peddle has hadample time in which to bring himself into compliance with the Consent Order, or at least take all reasonable steps to do so, and he hassimply chosen not to.

Penalty Hearing for Contempt [58] As a general rule, contempt proceedings are bifurcated into a liability phase and, if liability is established, a penalty phase.Having found Mr. Peddle to be in contempt of the Consent Order, I will hear submissions from counsel for the parties on the issue ofpenalty and costs. Any steps that Mr. Peddle takes prior to that hearing to become compliant with the Consent Order will be consideredat that time. The parties should contact the Assistant Deputy Registrar to

schedule a date for submissions on penalty and costs. ADDITIONAL ORDERS SOUGHT – FIRST APPLICATION

[ 59 ] I am dismissing Ms. Penney’s First Application in which she seeks a variety of orders regarding the shares and assets of the companies in question. [ 60 ] Having now been found in contempt, Mr. Peddle has an opportunity prior to the penalty hearing to bring himself in compliance with the Consent Order. If he does that, the relief that Ms. Penney seeks on the First Application should not be necessary.

If he does not, the consequences of his non-compliance will be considered further at that time. [ 61 ] Additionally, I am unwilling to order a freezing of the assets of 56557 Newfoundland and Labrador Limited, BANA Properties Inc. and Clarenville Ford Sales Ltd. because Mr. Peddle is not the sole beneficial owner of these assets. Mr. Lewis is also a beneficial owner of these assets and he is not a party to this application. [ 62 ] Nor am I prepared to order disclosure of further information regarding the potential sale of the business. In the course of these proceedings, Ms.

Penney’s counsel had an opportunity to cross-examine Mr. Peddle with respect to communications about potential sales of the business. [ 63 ] Ms. Penney sought an order for delivery of the Share Certificates in the First Application. The Consent Order already requires delivery of the Share Certificates and so a further order on the same subject is not necessary. Again, Mr. Peddle has an opportunity to deliver the Shares Certificates as required by the Consent Order prior to the penalty hearing on the Contempt Application. [ 64 ] I have dismissed Ms. Penney’s First Application.

Although there is a presumption that a successful party, in this case Mr. Peddle, is entitled to costs of an application, in the present case the majority of the hearing time was spent dealing with the Contempt Application, on which Mr. Peddle was not successful. As such, I am exercising my discretion not to order costs on the First Application. DISPOSITION 1. The First Application is dismissed with no order as to costs. 2. Leave is granted for the Contempt Application. 3. Mr. Peddle is found in contempt of the Consent Order dated November 28, 2018. 4. The parties shall

schedule a date for a hearing on penalty for contempt and costs of the Leave Application and Contempt Application. _____________________________ Katherine O'Brien Justice