1984 Enterprises Inc. v. Strider Date:, 2013 MBCA 100

Citation: 1984 Enterprises Inc. v. Strider Date: 20131106 Resources Ltd. et al., 2013 MBCA 100 IN THE COURT OF APPEAL OF MANITOBA Coram: Madam Justice Holly C. Beard Mr. Justice Marc M. Monnin Madam Justice Diana M. Cameron Docket: AI 10-30-07337 and AI 10-30-07475 ) B E T W E E N : ) ) ) 1984 ENTERPRISES INC. ) ) (Plaintiff) Respondent ) ) ) T. G. Frohlinger and - and - ) A. E. Verhaeghe ) for the Appellants ) STRIDER RESOURCES LIMITED and ) DANIEL VERN ZIEHLKE ) K. T. Williams and ) K. A.

Pedersen ) for the Respondent (Defendants) Appellants ) ) ) Appeal heard: - and - ) January 21, 2013 ) ) BLACK PEARL MINERALS ) Judgment delivered: CONSOLIDATED INC., CUPRUS MINING ) November 6, 2013 CORPORATION, ANDREW ROBERT ) COOK, JUDY BAKER, JAMES ) FAIRBAIRN, KERRY J. KNOLL, ) MITCHELL E. LAVERY, PETER T. ) GEORGE, SHEILA PICKENS, and ) ROBERT A. SIBTHORPE ) ) (Defendants) ) ) ) - and - ) ) ) Docket: AI 10-30-07480 ) B E T W E E N : ) ) 1984 ENTERPRISES INC. ) ) (Plaintiff) Respondent ) ) ) - and - ) ) CUPRUS MINING CORPORATION and ) ANDREW ROBERT COOK ) ) (Defendants) Appellants )

) - and - ) ) BLACK PEARL MINERALS ) CONSOLIDATED INC., STRIDER ) RESOURCES LIMITED, DANIEL VERN ) ZIEHLKE, JUDY BAKER, JAMES ) FAIRBAIRN, KERRY J. KNOLL, ) MITCHELL E. LAVERY, PETER T. ) GEORGE, SHEILA PICKENS, and ) ROBERT A. SIBTHORPE ) ) ( Defendants) ) ) MONNIN J.A. Introduction [ 1 ] This matter involves three appeals from the following two orders granted in favour of 1984 Enterprises Inc. (1984) (the respondent in all appeals) by a motion judge of the Court of Queen’s Bench:

i) an order signed on February 9, 2009, pursuant to s. 35(1) of The Builders’ Liens Act , C.C.S.M., c. B91 (the Act ), restraining Strider Resources Limited (Strider), Black Pearl Minerals Consolidated Inc. (Black Pearl), Cuprus Mining Corporation (Cuprus), Daniel Vern Ziehlke (Ziehlke), Andrew Robert Cook (Cook) and the seven other named individuals (all defendants in suit no. CI 08-01-59019) from removing materials affected by a builders’ lien to the prejudice of the lien from a specific mining property, and also pursuant to s. 60 of The Court of Queen’s Bench Act , C.C.S.M., c.

C280 (the QB Act ), ordering Black Pearl and Cuprus not to remove any equipment or materials from the same mining property, unless a bond in the amount of $215,212.59 was deposited with the court (the s. 35 order); and ii) an order pronounced on August 6, 2010, and signed and filed on November 4, 2010, finding Strider, Ziehlke, Cuprus and Cook liable for contempt for failing to comply with the s. 35 order and ordering each to pay a fine of $10,000 and also the costs of 1984 on a solicitor-client basis (the contempt order). [ 2 ] The three appeals are as follows:

i) in the first appeal, Strider and Ziehlke have appealed the s. 35 order; none of the other defendants in that matter have participated in this appeal; ii) in the second appeal, Strider and Ziehlke have similarly appealed the contempt and the corollary relief orders against them; and iii) in the third appeal, Cuprus and Cook have appealed both the finding of contempt against them and the corollary relief that was granted pursuant thereto.

Factual Background [ 3 ] Strider, a Manitoba corporation of which Ziehlke is the director and president, owns 57 mining claims in Northern Manitoba, commonly known as the Ferro and Wekusko Gold Property, located on Wekusko Lake, approximately 20 kilometers east of Snow Lake, Manitoba (the Ferro site). In late 2004, Black Pearl (now known as Canada Lithium Corp.), a publicly traded Ontario corporation, entered into option agreements with Strider to acquire the claims.

The agreement provided that, in addition to payments and the issuance of shares, Black Pearl had to incur certain exploration expenses by December 1, 2009. It moved equipment onto the property in order to do so. [ 4 ] Black Pearl then entered into an agreement with Cuprus, whose director and principal was Cook, by which Cuprus was to assume Black Pearl’s obligations with respect to the option agreements with Strider. Cuprus was to take over the exploration operation and was entitled to use Black Pearl’s equipment to do so. That work was to take place in 2008.

In the event that Cuprus’s obligations to Black Pearl were not fulfilled by November 30, 2008, the agreement with Cuprus would come to an end. [ 5 ] In or about May of 2008, 1984, a British Columbia-based corporation, entered into an agreement with Cuprus to provide workplace, health and safety services, staff support and monitoring service at the Ferro site. From May 21, 2008, to October 24, 2008, 1984 did so, receiving some payment for its services, but with the amount of $209,716.31 outstanding as of October 23, 2008.

On that date, through its solicitors, 1984 filed a builders’ lien against the mining claims with the Office of the Mining Recorder in Winnipeg, Manitoba, in accordance with the Act . [ 6 ] The operations carried on in the summer of 2008 resulted in the production of ore concentrate (concentrate) which was sent off for assay testing to determine the quantity of gold in the concentrate.

At the end of the season, when the operation was closed for the winter, concentrate remained stored on the property. [ 7 ] In the spring of 2009, 1984, on the strength of its lien filed in October 2008, brought a motion seeking an order pursuant to s. 35(1) of the Act restraining the appellants from removing material covered by the lien, an order for interim preservation of materials and an order attaching all property owned by Black Pearl located on the Ferro property. The motion was modified to limit the

extent of the security sought to the amount owing, given that the value of the equipment was thought to exceed $1,000,000. [ 8 ] 1984 was successful on the motion and obtained the s. 35 order (referred to herein at para. 1(i)), which order was pronounced on April 23, 2009. As a result of disputes between the parties as to the form of the order, a final order was not filed until February 9, 2010.

However, there is no dispute that Strider, Ziehlke, Cuprus and Cook were made aware of the reasons for judgment given by the motion judge and what the s. 35 order purported to restrain. [ 9 ] In 2009, there were some transactions between Cuprus and Strider, or companies affiliated with Strider, in respect of the mining claims. It led to a further option agreement with Good Earth Mining Company (Good Earth).

Good Earth produced concentrate throughout the summer and fall of 2009. [ 10 ] On or about October 22, 2009, Cook made arrangements for the concentrate produced in the fall of 2008 and throughout 2009 to be moved to a secure storage facility in Snow Lake. Altogether 52 bags of concentrate were transported to a garage in Snow Lake owned by Cook’s son, which garage was leased to Good Earth. [ 11 ] Neither 1984 nor its counsel were made aware of the removal of the concentrate from the Ferro site.

There is no evidence that Ziehlke or Strider became aware of that move until February of 2010, when they were notified by their lawyer who was also counsel to Cuprus and Cook. [ 12 ] Mr. Ziehlke’s evidence was that: .... I was asked by [my counsel] whether I knew what was happening to the concentrates stored on the Ferro Mining Property. I made inquiries and was advised that the bags of concentrate from the property had been moved to Snow Lake by Good Earth.

When assured by Cook that the concentrate had been removed for safe storage because Cook was concerned about theft and vandalism, Ziehlke accepted the explanation and did nothing further about the matter. He understood that Cook was speaking to their joint counsel. [ 13 ] It is unclear when the information as to the exact location of the concentrate and the details surrounding its removal was given to 1984. The appellants say that records were made of the material moved, its volume and weight, but details were never provided.

As well, the appellants argue that they made the materials available for inspection, but again no details were provided. [ 14 ] On April 20, 2010, 1984 brought a motion for contempt seeking return of the concentrate to the property or, alternatively, the posting of a bond for the amount of 1984’s claim. Affidavits were filed, but no cross-examinations occurred. The motion was heard by the same judge who had granted the s. 35 order. He rendered his decision on August 6, 2010, finding Strider and Cuprus, as well as their directing minds, Ziehlke and Cook, in contempt.

He imposed a fine of $10,000 upon each of the four. Events After the Contempt Order [ 15 ] In separate appeals, Cuprus and Cook, as well as Strider and Ziehlke, appealed from the findings of contempt. [ 16 ] 1984 objected to the appellants proceeding with the appeals while ostensibly still in contempt of the original order. The appeal of the original order had been stayed pending the hearing of the contempt motion.

The appeals of the contempt order were also stayed pending resolution of issues with respect to the original order and the outstanding contempt citation. [ 17 ] By a consent order pronounced September 9, 2011, and entered May 7, 2012, it was ordered that the sum of $215,212 be paid into court and held pending the determination of the validity of the lien and that the lien and pending litigation order be vacated. The sum was paid into the Court of Queen’s Bench and the lien and pending litigation order were vacated pursuant to s. 55 of the Act . The matter then proceeded on appeal before this court.

First Appeal – Issue of Mootness [ 18 ] Section 35(1) of the Act states as follows: Removal of materials during lien 35(1) During the continuance of a lien, no portion of the materials affected by it shall be removed to the prejudice of the lien and any attempts at such removal may be restrained on application to a judge. [ 19 ] Prior to the hearing of the appeal, the panel advised counsel that it was concerned that the appeal regarding the s. 35 order had become moot upon the deposit of the funds into this court and the vacating of the lien and pending litigation order.

The panel raised whether that order had been spent. [ 20 ] Counsel for the appellants argued that the validity of the lien was still a live issue, as was the appropriateness of the relief given by the motion judge. After submissions on that issue, the panel advised that it was of the view that the s. 35 order was spent, but it would hear the balance of the appeal as to the contempt order. [ 21 ] On the s. 35 motion, the appellants had argued that the motion judge should decline jurisdiction to hear the motion

pending resolution of a prior motion brought before the Master to determine jurisdiction generally. They also argued that a privativeclause in the contract between 1984 and Cuprus set the governing law of the contract as that of British Columbia and attorned disputes tothe courts in that province. The motion judge refused, holding that he had jurisdiction for a number of reasons, including the fact thatthis matter dealt with a builders’ lien over property which was in Manitoba.

The motion judge noted that the scope of the motion wasprimarily to attach equipment and concentrate located on the Ferro site. [22] On the appeal, Strider and Ziehlke wished to argue that there was no direct privity between Strider and Black Pearl onthe one hand, and Cuprus and 1984 on the other. Privity, they say, was necessary in order to base a claim for a lien.

The argument thatthere was no privity arises because the lien has been filed against mining claims registered to Strider and not Cuprus, while the contracton which the lien is based was between Cuprus and 1984, to which neither Strider nor Black Pearl was a party. The motion judgeconcluded that the question of privity was “a red herring” since the production of the concentrate allowing an assay would assist indetermining the value of Strider’s mining claims, thus creating a benefit to Strider.

The motion judge also found that there was anarguable position that Black Pearl, Cuprus and Strider were engaged in a joint venture in respect of the mining claims at the time that1984 entered into the contract with Cuprus. [23] Strider and Ziehlke also wished to argue that 1984 was not a company licensed to do business in Manitoba at the time ofthe filing of the lien and, therefore, the lien was invalidly filed.

The motion judge found that the company was registered in Manitoba atthe time that it brought the motion under s. 35, which satisfied the statutory requirements. [24] The panel was of the view that, to the extent there was a need to consider the validity of the lien in order to deal with thes. 35 motion, that validity was to be determined only on a prima facie basis. Questions of substance requiring evidence were properly setover to be determined after a trial or

summary proceeding which would include the issue of the validity of the lien. The panel saw noneed to interfere with the granting of the interim preservation order, given the issues that needed to be fleshed out in order to deal withlien entitlement. Further, there was no error of law with the motion judge’s decision to hear the s. 35 motion pending the application onforum conveniens before the Master. [25] The s. 35 order was spent with the payment into court and the vacating of the lien under s. 55 of the Act.

Since the issueof the security of the concentrate and the equipment was no longer a live one between the parties, the matter of the validity of the s. 35order was moot. In those circumstances, there was no controversy left to deal with in the appeal (see Borowski v. Canada (AttorneyGeneral), (SCC), [1989] 1 S.C.R. 342 at 353). The proper forum for determining the validity of the lien in the firstinstance should be the Court of Queen’s Bench.

The Second and Third Appeals – The Contempt Appeals [26] The matters that remain to be dealt with are the appeals of Cuprus and its president and director, Cook, and Strider andits president and director, Ziehlke, with respect to the findings of contempt. Standard of Review [27] Where the motion judge made findings of fact, those are subject to review on a standard of palpable and overriding error(see Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235).

Furthermore, the findings of contempt and the appropriate penalty toimpose are discretionary decisions of the motion judge, entitled to a high degree of deference if the correct principles have beenfollowed. Reasons of the Motion Judge [28] In his decision on the contempt motion, the motion judge found that the concentrate had been removed. That finding isnot in issue. He dealt with what he called the two justifications presented by the appellants.

As to the first one, that the prohibition inthe order with respect to removal of materials did not extend to a removal which was not “to the prejudice of the lien,” he did not agree. He found that the removal without the consent or knowledge of 1984 meant that the enforceability of the lien was affected because theconcentrate was not available to 1984 to satisfy its claim.

He also found that there was “substantial delay” in admitting to the removaland the new location of the items, during which time the value of the lien was diminished. [29] As to the allegation that the removal was done for the purposes of securing the material and preventing its theft, themotion judge concluded that there was selective evidence presented by the appellants and he was not satisfied that that was the trueintent of the appellants’ actions. [30] He reviewed the three elements of contempt, namely:

a) knowledge of the order;

b) a breach of the order; and

c) a breach that was willful. [31] He concluded that there was knowledge of the order by all of the appellants. He found a breach, being that the removalof the materials was to the detriment of the lien. He concluded that the conduct was willful and persistent because it had been brought tothe attention of all appellants and had not been remedied. He also found that the attempt by all appellants to justify the removal as being“to protect the interests of the lien-holder” was a “very careful management of the available truth in [the] matter” (at para. 21).

He foundthat the contempt had been proven beyond a reasonable doubt. [32] He then turned to the issue of whether all four appellants were in contempt. He found that Cuprus, through its directingmind, Cook, had full knowledge of the status and location of the concentrate at all material times and failed to advise counsel that it hadbeen removed, nor did they seek counsel’s advice before removing the concentrate, despite being aware of the stipulations of the original

order. [33] As to Strider and its directing mind, Ziehlke, he concluded that Strider was the owner of the mining claims and wasrequired to ensure that the terms of the orders to which the property was subject were obeyed. On learning of the contempt through itscounsel, Strider and Ziehlke accepted Cook’s explanation as to what occurred and took no steps to cure the contempt. He found themliable as well. [34] As to the remedy, he considered the factors set out in Rogers v.

Rogers, 2008 MBQB 131, 227 Man.R. (2d) 118, andconcluded that striking out the pleadings or incarceration were not appropriate, but that fines were. Having found that the activities werenot only contemptuous but continuing, he believed that the fines needed to be substantial. He imposed a fine of $10,000 on each of thefour appellants. He also ordered that the four appellants were jointly and severally liable for 1984’s legal costs on a solicitor-clientbasis. Issues on Appeals of the Contempt Order [35] Issues on the contempt appeals are as follows:

a) was there a breach;

b) are all the appellants liable for the contempt; and

c) were the fines imposed appropriate.

a) Was there a breach of the s. 35 order? [36] The appellants’ arguments with respect to the finding by the motion judge of a breach of the s. 35 order can besummarized as two grounds. The first ground of appeal they argue is that the wording of the prohibition in the s. 35 order is ambiguousdue to the inclusion of the words “to the prejudice of the lien.” Secondly, they argue that the removal was not to the prejudice of the lienas its purpose was to preserve the material and, therefore, maintain the integrity of the value of the concentrate.

It was not done in amanner contrary to the terms or the spirit of the prohibition. Ambiguity [37] On this appeal, for the first time, the appellants argue that the insertion of the words “to the prejudice of the lien” inclause (

a) of the s. 35 order, which contains the prohibition against the removal of materials from the property, renders the meaning ofthe clause ambiguous and too broad to be enforceable. [38] It is to be noted that, as pointed out by 1984, counsel did not object to the wording of the s. 35 order when it wasultimately filed, nor was a clarification sought after the reasons were delivered by the motion judge. Cuprus and Cook did not seek legaladvice before the removal to determine whether their actions were prohibited.

While the failure to seek legal advice is not in itselfdeterminative, it would have bolstered their argument that they were unclear as to what the order meant and to what extent theprohibition affected their action. [39] It is clear that the reading of the clause prohibits the removal of materials.

The addition of the words “to the prejudiceof the lien” track the wording of s. 35(1) of the Act. [40] Courts have recognized that “in order to ground a contempt finding, a court order must be clear or, to put the pointanother way, that an ambiguity in an order should be resolved to the benefit of the alleged contemnor” (Baumung v. 8 & 10 Cattle Co-operative Ltd. et al., 2005 SKCA 108 at para. 27, 269 Sask.R. 190).

The appellants argue that the order must be in plain, specific termsand cannot be left to inference, and, where the order is ambiguous, the appellants are entitled to the most favourable construction of theterms (see Re United Steelworkers of America, Local 663 v. Anaconda Company (Canada) Ltd. (1969), (BC SC), 3D.L.R. (3d) 577 (B.C. S.C.), and McLachlan v. McLachlan, 2010 MBQB 189, 256 Man.R. (2d) 130). [41] In Culligan Canada Ltd. et al. v.

Fettes et al., 2010 SKCA 151, 366 Sask.R. 24, the Saskatchewan Court of Appealidentified three possible reasons for a lack of clarity in an order that may make a contempt finding inappropriate. They are:

a) that the order is missing an essential detail about where, when or to whom the order will apply;

b) that the order incorporates overly broad and unclear language; or

c) that external circumstances have obscured the meaning of the order. [42] Only the second aspect has relevance to the appellants’ argument. The prohibition against removal of material is clear. What remains to determine is whether the addition of the words “to the prejudice of the lien” renders the order unclear. [43] A simple reading of those words would suggest that a removal which was to the disadvantage of or negatively affectedthe lien holder’s interest in the property, is what is prohibited.

Defendants cannot insist on absolute precision and must be prepared tomake a full and honest attempt to comply (see Wright, Laymon & Umney v. Wright (1949), 66 R.P.C. 149 at 152, per Lord Green M.R,cited in Sharpe, Injunctions and Specific Performance, looseleaf (Toronto: Thomson Reuters Canada Limited, 2012) at para. 6.180). [44] In my view, the wording of the s. 35 order is not ambiguous such that the appellants were unclear as to what they couldor could not do. It would have been impossible to list all situations where a removal might or might not have been permissible. No prejudice

[45] The next argument advanced by the appellants is that the concentrates were secure in the garage owned by Cook’s sonand leased to the subcontractor. The items were recoverable and the value of the concentrate has been maintained. Therefore, theremoval was in furtherance of the lien and not to its detriment. [46] The motion judge found that the lien and its enforceability were affected by the removal of the concentrate since“potentially readily realizable asset(

s) being the gold ore concentrate” (at para. 10) were removed and not subject to sale by the lienholder. In addition, when the lien holder became aware of the removal and brought it to the attention of the appellants’ counsel, therewas a substantial delay in admitting that the material had been removed and in identifying where it had been placed.

During that periodof time, the concentrate was not available and, at the very least, there was a breach and a detriment, from the lien holders’ perspective, tothe value of its lien during that period of time. [47] It was open for the motion judge, on the facts before him, to conclude that the removal of the concentrate, whethermoved for the purpose of preventing vandalism or not (a fact which he seemed not to accept), was detrimental and contrary to his order. [48] The removal of the concentrate from the property without any notice to 1984 or obtaining its consent and placing itsurreptitiously in a locale known only to Cook and his subcontractor without providing details of its new location or of the itemsremoved were contrary to both the spirit of the prohibition contained in the motion judge’s order and the actual wording of the order.

Itwas not an error on the part of the motion judge to so conclude. [49] The argument that the move was in fact a benefit done for the purpose of safeguarding the concentrate and, hence, notcontemptuous or in breach of the prohibition would have greater force had there been an open discussion with the lien holder as to thesteps to be taken by Cook and the location to which it was to be transported. Placing of the concentrate in a third party’s premises off ofthe property raises a number of issues with respect to the traceability of the concentrate and its availability to the lien holder.

Whether ornot it was done for the purpose stated by Cook, of which the motion judge was understandably skeptical, it was open to the motion judgeto find that it was in breach of his order.

Until the appellants took steps to cure the breach by returning the concentrate to the property orplacing the funds into court, they were not in compliance. [50] The credibility of the assertion by Cook and Cuprus that their sole and only purpose for moving the concentrate was forits safeguarding and not to thwart the enforceability of the lien, is hindered by their lack of disclosure to 1984 or even to their owncounsel of the actions they took, as well as by the delay in providing details of the amounts removed and their location once asked forthat information.

Finally, the argument that safeguarding and not withdrawal from the purview of the lien was the intention isdiminished when one takes into account the fact that the concentrate was housed on premises owned by Cook’s son and leased to GoodEarth, neither being a party to the court order. [51] In the circumstances, it was open for the motion judge to conclude that the removal of the concentrate was for reasonsother than the safeguarding of the asset to the benefit of the lien and was, therefore, to the prejudice of the lien. There was no palpableand overriding error in such a finding.

Was the removal of the concentrate contemptuous of the s. 35 order? [52] The appellants argue that clause (

a) of the s. 35 order was not an outright prohibition against the removal of property,but restrained removal where it would be to the prejudice of the lien holder. The argument is that, as long as the concentrate waspreserved, although at another location, 1984’s security was still extant and, therefore, they were in compliance with the order. Theyargue that Cook’s intention in removing the concentrate was not to disobey the court order. The appellants rely on Tusket Sales &Service Ltd. v.

Rafuse et al., 2002 NSSC 53, 202 N.S.R. (2d) 395, a decision of the Supreme Court of Nova Scotia, to the effect that,unless the court is satisfied that the defendants had “intentionally” ignored the undertakings, there was no contempt. In that case, therewas a difference of opinion as to what was required for compliance. [53] The appellants also rely upon the case of Paton v. Shymkiw (1996), (MB KB), 114 Man.R. (2d) 303(Q.B.), a decision of Steel J. (as she then was), where a father applied for an order of contempt against the mother with respect to anorder of access to a child.

After reviewing a number of family law decisions dealing with contempt in family matters, she concluded (atpara. 28): Therefore, if the custodial parent can show that she acted at all times in the best interests of the child and not with the intention ofdisobeying the court’s order out of self interest, the courts have been reluctant to make a finding of contempt. The appellants argue that Cook’s intention in this case, at all times, was not self-interest, but preservation of the property for the benefitfor those having an interest. [54] In my view, Paton does not assist the appellants in this case.

First of all, the reference to acting “in the best interests ofthe child” and not with the intention of disobeying out of self-interest are specifically related to the family law context where the interestsof the child are primary.

That aspect of Paton, in my view, should be limited to use in the family law sphere and not transposed to civilcontempt issues generally. [55] Furthermore, it should be noted that, in Paton, Steel J., in reviewing the law with respect to contempt and particularlythe intention required for a breach of an order, stated (at para. 25): However, the standard of intention required for breach of the order is knowledge of the reasons for order and contravention of the order.

Direct intention to disobey the order is not required. (Nintendo, [(1991), 41 F.T.R. 186)] at p. 562 [C.R.R.]) Willful disregard of thecourt order is sufficient. (See Marciano v. Marciano, [[1990] M.J. No. 601 (QL) (Q.B.)].) The expression “willful” as applicable tocontempt orders of the court is intended to exclude only casual, accidental or unintentional acts of disobedience. [emphasis added] [56] The appellants also rely on the case of Skybound Dev. Ltd. v. Hughes Properties Ltd., (BC CA),[1988] 5 W.W.R. 355 (B.C. C.A.).

In that case, a solicitor was held in contempt for failing to pay over certain funds he held in his trustaccount to the other party in the litigation in accordance with an order of the court. The solicitor was attempting to appeal the order forpayment out and had filed an application for leave to appeal. A stay of the order was not granted because of a procedural issue. In thereasons for decision (overturning the finding of contempt), one of the three appellate court judges commented on the belief of thesolicitor that if the money was paid over, it would become unrecoverable.

He stated that such a belief was not unreasonable and that themoving party did not have a basis on which to suggest that the funds held in trust by the solicitor were not secure pending thedetermination. The appellants argue that that case is analogous to the case at bar, given that Cook’s actions were done to secure theconcentrate. The appellants suggest that 1984 has not established that it has any basis on which to argue that the concentrate was notsecure in its location where it remained available to satisfy the security. [57] A reading of Skybound does not lead me to the same conclusion.

The case rests on whether there was a specified timeset out in the order by which the solicitor was to have paid out the funds. Absent that specific direction, the appellate court held thatcontempt of the direction contained in the payment-out order had not been made out. The concern in Skybound with respect to thesecurity of the funds related primarily to the stay application which had not been successful. [58] The securing of the concentrate, even if accepted as the motive for the breach of the court order, does not excuse it.

Asmentioned previously, this was a willful disregard of the prohibition against the removal of material. No attempts were made to consideralternative solutions or to inform the lien holder, or its counsel, of the steps that were being planned.

In fact, no notice was given to thelien holder, or its counsel, that this had taken place, nor of the location of the concentrate, until pressed. [59] In my view, it would have been incumbent upon the appellants to satisfy the court that there was no detrimental effectupon the lien holder’s right to possession of those concentrates in satisfaction of its claim if the matter ever reached that stage.

Apartfrom submissions by counsel, no evidence was ever provided to the motion judge as to the terms and conditions under which theconcentrate remained on the premises in Snow Lake, or undertakings given by the parties who had access to it that it would not bemoved or otherwise disposed of and would be delivered up if requested. There was no evidence that the order was being complied withby the time of the court hearing.

It was, therefore, open for him to conclude that the removal of the concentrate was contemptuous. [60] In any event, it is clear that the court has jurisdiction to punish for disobedience of its order, even when the order hasbeen complied with by the time of the contempt hearing. Purging of the contempt by compliance is merely a matter to be taken intoaccount in assessing the penalty. See Re Ajax and Pickering General Hospital et al. v. Canadian Union of Public Employees et al.(1981), (ON CA), 35 O.R. (2d) 293 (C.A.), leave to appeal to S.C.C. denied, [1982] S.C.C.A. No. 254 (QL).

b) Were all four parties in contempt of the s. 35 order? [61] The motion judge found that all four of the appellants were in contempt of the court order. As to Cuprus and Cook, hestated as follows (at para. 26): With respect to Cuprus Mining Corporation, the evidence from Cook’s affidavit indicates that Cuprus Mining Corporation had fullknowledge of the status and location of the concentrate at all material times.

It also appears that Cuprus failed or neglected to advisecounsel that the concentrate had been removed from the mining property until counsel made inquiries of Cook in March 2010, nor did itseek counsel’s advice before the concentrate was removed. [62] He also found that Cook was the directing mind of Cuprus and it was difficult to separate his interests and dealings fromthose of the corporation over which he exerted control. [63] For the reasons set out above, I am of the view that there was ample evidence to allow the motion judge to conclude thatCook was aware of the prohibition and that it prevented him from doing what he did.

In my view, the fact that he took no steps to evenconsult with counsel or notify the lien holder and seek his concurrence are all indications that he was aware of the fact that the removalwould be in breach of the court order. At the very least, he was reckless, and recklessness may constitute intent to disobey a court order. See United Nurses of Alberta v. Alberta (Attorney General), (SCC), [1992] 1 S.C.R. 901. [64] As to Strider and Ziehlke, however, different considerations apply. With respect to those two appellants, the trialjudge’s findings were (at paras. 28-30): Strider Resources Ltd. through Mr.

Ziehlke was at the time of the order the owner of the mining properties in question and was liable toensure that the terms of the order to which it was subject were complied with.

Strider is party to a continuing agreement with the entity it asserts now has control over the property and accordingly still had a duty toensure that the order was complied with. Further, on learning of the contempt through its counsel, Strider simply accepted Mr. Cook’s explanation of what occurred and took nosteps to cure the contempt. [65] The evidence before the motion judge was that Ziehlke, and therefore by extension, Strider, were not aware that theconcentrate had been removed from the premises until notified by their counsel in February 2010.

There is no suggestion that Ziehlkeactively participated in the conduct which the order prohibited. Had Ziehlke been made aware of what Cook proposed to do then,arguably, he may have had a duty to at least attempt to prevent him from doing so or to suggest that he should not.

However, Ziehlke’sevidence, through his affidavit, upon which he was not cross-examined, was to the effect that he relied upon his counsel to take thenecessary steps to remedy the situation. [66] 1984 argues that Strider and Ziehlke had an obligation to see that the original order was complied with and had theprerogative to deny entry or to make the use of their premises conditional upon compliance with the court order. There is no doubt thatfailure to act, in certain circumstances, may form the basis of a contempt order (see H. Sculthorp & Son Ltd. v. Sculthorp (No. 2), [1926]O.J. No. 465 (QL) (Sup. Ct.)).

However, in this case, the allegation of a failure to act could only arise once the removal had taken place. There is no evidence that Ziehlke was aware that Cook would be doing so or that he was advised of the possibility of it occurring. Again, there was no cross-examination of Ziehlke on his affidavit, and Cook’s evidence is that he acted unilaterally. [67] 1984 argues on the strength of Canada Metal Co. Ltd. et al. v. Canadian Broadcasting Corp. et al. (No. 2) (1974), (ON SC), 4 O.R. (2d) 585 (H.Ct. J.), that someone can be held in contempt even though their role in the matter is entirelypassive.

In that case, the issue was whether a director or officer could be held liable where they failed to do something that led to thebreach. One defendant, a story editor, was found to be in contempt since he was responsible for ensuring that a particular story compliedwith an injunction that had been granted.

He had a responsibility to make all reasonable attempts to ensure that the story complied withthe injunction. [68] In this case, there is no evidence that Ziehlke was in a position to prevent Cook from taking the steps he did, nor is thereany evidence that, once those steps had been taken, Ziehlke was in a position to require that Cook take remedial steps. The return of theconcentrate to the premises was never seriously discussed by any of the parties.

At issue was how to ensure that the concentrateremained available to satisfy the lien holder’s right to security in the event it became entitled to it. [69] From the evidence presented, Ziehlke did not participate in the acts which were contemptuous and, when becomingaware of the breach of the order, could not reasonably be expected to have taken steps to correct it. In

summary, there were insufficientfacts upon which the motion judge could conclude that Ziehlke willingly participated in the continuation of a breach of the order. It wasa palpable and overriding error for the motion judge to so conclude. In the circumstances, I am of the view that the finding of contemptagainst him and Strider cannot be upheld.

c) Were the fines and their amounts appropriate? [70] The motion judge considered what would be the appropriate remedy and concluded that both striking the defendants’pleadings and incarceration were not appropriate at that stage. He concluded that fines were the better remedy. The determination of theappropriate remedy is a discretionary finding to which this court owes a high degree of deference. I see no error in the motion judge’sanalysis.

The issue is the amount of the fines. [71] In the motion judge’s estimation, the fact that the activities were not only contemptuous, but they continued up to thetime of the hearing before him, meant that the fines needed to be substantial and imposed on all the defendants who were the subject ofthe motion.

He, therefore, imposed a fine of $10,000 on each defendant and ordered that they were to be jointly and severally liable topay the plaintiff’s legal costs on a solicitor-client basis, payable forthwith in any event of the cause. (I understand that those costs havebeen paid.) [72] As to the amount of the fine, the appellants argue that, given that the actions of Cook were carried out to enhance thesecurity of the concentrate and not for the purposes of depriving the lien holder of its security, and in the belief that it was not contrary tothe terms of the order, the fines were excessive. [73] What is at issue in this case is not a criminal contempt, but a civil one.

The primary objective in cases of civil contemptis the enforcement of the performance of a court order. Punishment is secondary. See Apotex Fermentation Inc. et al. v. NovopharmLtd. et al. (1998), (MB CA), 129 Man.R. (2d) 161 at para. 283 (C.A.). [74] That said, in the same case, when reviewing the issue of the penalty to be imposed for the contempt, Scott C.J.M., forthe court, noted the role of the public interest in the administration of justice when imposing punishment. He stated (at paras. 315-16): In United Nurses of Alberta v.

Alberta (Attorney General), the significance of the difference is well illustrated by the dissentingdecision of Sopinka, J. There, he said (at p. 944 [S.C.R.]):

“Criminal contempt for conduct ex facie the court is generally initiated by the Attorney General while civil contempt proceedings areinitiated by a party or person affected by the order sought to be enforced. In order to secure compliance in a proceeding for civilcontempt, a court may impose a fine or other penalty which will be exacted in the absence of compliance.

However, the object is alwayscompliance and not punishment.” It was Sopinka, J.’s, opinion that when confronted with a civil contempt, the object of the court in imposing a penalty should be to securecompliance or future compliance and not to punish the contemnor. The majority, however, stressed more concern than did he that evenin cases of civil contempt the court must demonstrate its power to uphold its dignity and support its process. This concern wasemphasized in the subsequent Supreme Court decision in Vidéotron Ltée et Premier Choix; TVEC Inc. v.

Industries Microlecproduits électroniques Inc. et autres, (SCC), [1992] 2 S.C.R. 1065; 141 N.R. 281; 50 Q.A.C. 161, where Gonthier, J.,in a case which dealt with a purely private order, stated (at p. 1075 [S.C.R.]): “The penalty for contempt of court, even when it is used to enforce a purely private order, still involves an element of ‘public law’, in asense, because respect for the role and authority of the courts, one of the foundations of the rule of law, is always at issue.” Fines of $10,000 on the officers of the corporate defendants were imposed. [75] In Chicago Blower Co. v. 141209 Canada Ltd. and Transregent Holdings Ltd. et al. (1987), (MBCA), 44 Man.R. (2d) 241 (C.A.), while the amounts in issue were substantial (in the millions of dollars), the fines imposed upon thedirectors who were in contempt were originally set at $10,000 and reduced to $5,000 each. [76] Fines of $10,000 on individuals may be out of line in a family law context, where they would create a disproportionateand onerous burden.

However, in a commercial context such as this one, I am of the view that the $10,000 fines imposed on thecorporation and director are not excessive. [77] The determination of the motion judge as to what is an appropriate fine must be given great deference. The role of anappellate court in reviewing a sentence for contempt should be limited to intervening only where the sentence is clearly unfit or arrived atby applying the wrong principle. See British Columbia Forest Products Ltd. v. Lawson, [1988] B.C.J. No. 1619 (QL) (C.A.), perMcLachlin J.A. (as she then was).

Although in a criminal contempt context, I find those comments applicable in this matter. Conclusion [78] For the reasons set out above, I would allow the appeals brought by Strider and Ziehlke and set aside the finding ofcontempt made against them and the fines imposed. In all other respects, and against all other appellants, I would dismiss the appeals. [79] The matter should now proceed before the Court of Queen’s Bench with respect to the claim brought by 1984. Costs [80] 1984 will have its costs against Cuprus and Cook in this court.

Strider and Ziehlke, while successful with respect to thecontempt proceedings, were not successful on their appeal of the s. 35 order and I would not give them their costs in this court nor thecourt below. J.A. I agree: J.A. I agree: J.A.