



COURT OF APPEAL FOR ONTARIO

CITATION: Wolseley Canada Inc. v. Neal Traffic Services
    Limited (National Traffic Services), 2019 ONCA 276

DATE: 20190409

DOCKET: C65202

Simmons, Juriansz and Miller JJ.A.

BETWEEN

Wolseley Canada Inc.

Plaintiff (Respondent)

and

Neal Traffic Services Limited o/a
    National Traffic Services, Johannes Lokker and Marilyn Louise
    Lokker

Defendants (Appellants)

Neil M. Abramson and Robert Barbiero, for the appellants

Barry Yellin and Kayla Carr, for the respondent

Heard: April 4, 2019

On appeal from the
    orders of Justice R. John Harper of the Superior Court of Justice, dated June
    26, 2017 and March 6, 2018.

REASONS FOR DECISION

[1]

The respondent brought an action claiming monies it had advanced to the appellants
    had not been properly disbursed, and that the appellants failed to have a
    proper accounting system to account for funds flowing in and flowing out.

[2]

On April 21, 2017, Carpenter-Gunn J. made an interim order requiring the
    appellants to: 1) account for monies they had received from the respondent to
    pay third party freight carriers, by delivering a comprehensive spread sheet
    within 15 days and corroborating documents within 3 days of any request; 2)
    disclose all related documents to an accounting firm to be appointed by the
    respondent following receipt of a confidentiality/non-disclosure agreement; and
    3) pay any unpaid accounts within 15 days.

[3]

The respondent brought a successful motion to have the appellants found
    in contempt of paragraphs 1 and 2 of the order.

[4]

In oral argument, the appellants did not contest the motion judges June
    26, 2017 finding that they were in contempt of paragraphs 1 and 2 of the April
    21, 2017 order. Rather, they confined their submissions to asserting that the
    sentence imposed on March 6, 2018 was based on an erroneous finding they had
    not purged their contempt and, in any event, was disproportionate and therefore
    unfit.

[5]

We accept the appellants submission that the motion judge erred in dismissing
    their fresh evidence motion returned on the day set for the contempt sentencing.
    The motion judge refused to admit the affidavits the appellants tendered, taking
    the view they were splitting their case by seeking to introduce further
    evidence concerning their motion to vary the April 21, 2017 order and the
    respondents sanctions motion.

[6]

One of the grounds relied on in the appellants notice of motion to
    admit fresh evidence was that they had purged their contempt. Whether the
    appellants had purged their contempt was relevant to, and was likely to impact,
    the issue of sentence. That question continued to be relevant until sentence
    was imposed. The fresh evidence addressed that relevant issue by addressing what
    had occurred since the previous attendance before the motion judge in November 2017.
    The appellants deposed that they had fully complied with the April 21, 2017 order
    by the time of the sentencing hearing in March, 2018. They deposed that as of
    early December 2017 (when they supplied corrected bank statements for 2017),
    they had supplied all requested documents to PriceWaterhouseCoopers (PWC),
    the accountants appointed by the respondent under the April 21, 2017 order, and
    had not received any further requests for documents.

[7]

These asserted facts would have been before the motion judge had he not
    erred by striking portions of the appellants affidavits that addressed these
    facts and by dismissing the fresh evidence motion.

[8]

In concluding the appellants had not purged their contempt the motion
    judge relied on the appellants failure to account for all money in and out,
    ostensibly supported by the affidavit of the respondents accounting expert,
    Ms. Patel of PWC. The motion judge indicated that paragraph 31 of Ms. Patels
    January 3, 2018 affidavit demonstrated that PWC was not given all information
    as ordered.

[9]

In our view, Ms. Patels affidavit did not contradict the claim in the
    appellants fresh evidence that they had done what was necessary to comply with
    paragraphs 1 and 2 of the April 21, 2017 order. At its highest, paragraph 31 of
    Ms. Patels affidavit indicated that she did not know whether PWC had been
    given all the necessary information to comply with the April 21, 2017 order. As
    we read paragraph 31, Ms. Patel deposed she had not been able to fully
    reconcile all monies received by the appellants from the respondent with all
    third-party freight carrier accounts the appellants were required to pay with
    those funds. However, the inability to fully reconcile all monies received from
    the respondent and all payments made by the appellants to third party freight
    carriers does not in itself demonstrate that the appellants had not produced
    all the documents as required. The obligation to account in paragraphs 1 and 2
    of the April 21, 2017 order, understood in the context of the action, is an
    obligation to produce documents. The inability to reconcile all the monies
    received and paid out may simply highlight an issue to be resolved at trial.

[10]

Concerning
    the fitness of the sentence imposed, the appeal record discloses that the
    appellants made extensive efforts to comply the with April 21, 2017 order,
    commencing in early May 2017 after PWC provided the confidentiality/non-disclosure
    agreement required under the April 21, 2017 order. Having regard to these efforts,
    the extensive disclosure that was ordered, and the extent of the disclosure
    that was made, we conclude that the term of the sentencing order requiring that
    the appellants pleadings be struck is disproportionate. The fact that the appellants
    former counsel conceded that the appellants pleading could be struck if the
    appellants failed to purge their contempt by July 15, 2017, while an important
    consideration, does not alter that conclusion. It remained for the motion judge
    to impose a fit sentence taking account of all the evidence that should have
    been before the court at the time of the sentencing hearing in March 2018.

[11]

Further,
    we see no proper basis for imposing as a term of the sentencing order a requirement
    that the appellants pay PWCs costs. The April 21, 2017 order required the
    respondent to pay those costs. The issue of who is ultimately responsible for
    PWCs fees is a matter for the fixing of costs after trial.

[12]

In
    the result, the appeal is allowed in part by setting aside the declaration that
    the appellants have not purged their contempt; by setting aside all orders
    relating to striking the appellants pleadings; and by setting aside the order
    requiring the appellants to pay PWCs costs.

[13]

The
    appellants may make brief written costs submissions within 10 days of the
    release of these reasons; the respondents may do the same within 10 days
    following receipt of the appellants submissions.

Janet Simmons J.A.

R.G. Juriansz J.A.

B.W. Miller J.A.


