



COURT OF APPEAL FOR ONTARIO

CITATION: Sabourin and Sun Group of
    Companies v. Laiken, 2013 ONCA 530

DATE: 20130827

DOCKET: C56104

Rosenberg, Sharpe and Gillese JJ.A.

BETWEEN

Sabourin and Sun Group of Companies

Plaintiff/Defendant by Counterclaim

and

Judith Laiken

Defendant/Plaintiff by Counterclaim

AND BETWEEN

Judith Laiken

Appellant

and

Sabourin and Sun Group
    of Companies, Peter Sabourin, Sabourin and Sun Canada Inc., Sabourin and Sun
    Inc., a Bahamas Corporation, Sabourin and Sun BVI Trust, and Intervest Direct
    Inc., 1077472 Ontario Limited, Greg Irwin, Sabourin and Sun Inc. and 1061971
    Ontario Limited

and

Peter W.G. Carey

Respondent

Kevin D. Toyne, for the appellant Judith Laiken

Patrick F. Schindler, for the respondent Peter W.G.
    Carey

Heard: June 17, 2013

On appeal from the order of Justice
    Lois B. Roberts of the Superior Court of Justice, dated September 10, 2012, with
    reasons reported at 2012 ONSC 7252, setting aside her earlier order of October
    12, 2011  (2011 ONSC 5892).

Sharpe
    J.A
.:

[1]

This appeal raises procedural and substantive issues in relation to
    contempt and the duties of a solicitor representing a party who is subject to a
Mareva
injunction.  The respondent, Peter Carey, a solicitor, was
    acting for Peter Sabourin, a financial advisor who was subject to a
Mareva
injunction obtained by the appellant, Judith Laiken.  Sabourin sent Carey a
    cheque for $500,000 without instructions. Carey deposited the cheque in his
    trust account. Sabourin later instructed Carey to use the funds to settle with an
    unrelated group of creditors represented by Bill Brown. Carey refused to follow
    those instructions as to do so would violate the
Mareva
injunction. 
    Sabourin then instructed Carey to attempt to settle with Laiken. Carey was
    unable to reach an agreement with Laikens solicitor.  When Carey advised him that
    settlement of the Laiken claim was not possible, Sabourin instructed Carey to
    return the funds to him. Carey deducted $60,000 for his legal fees and returned
    the remaining funds to his client.

[2]

Laiken brought this contempt motion against Carey alleging that by
    returning the money to his client, Carey had violated the
Mareva
injunction which, by its terms, applied to monies held in trust. After
    considering the affidavit evidence, the motion judge found Carey in contempt
    and adjourned the matter pursuant to rule 60.11 (5) and (8) of the
Rules of
    Civil Procedure
, R.R.O. 1990, Reg. 194. When the matter resumed before the
    motion judge, Carey testified that he honestly believed that he was acting
    properly in returning the money to Sabourin and that he did not intend to
    breach the
Mareva
order. He submitted that the contempt finding should
    be set aside. The motion judge found, on the basis of Careys oral evidence,
    that she was not satisfied beyond a reasonable doubt that Carey had
    deliberately violated the
Mareva
order or that his interpretation of
    it was wilfully blind. It followed, in her view, that her previous finding of
    contempt should be set aside.

[3]

Laiken appeals on the grounds that the motion judge erred in the
    procedure she followed and in the legal test she applied to the allegations of
    contempt. Laiken submits that the motion judge should not have permitted Carey
    to offer fresh evidence and to re-open the initial contempt finding and that,
    in any event, on the evidence, Careys conduct did constitute contempt of the
Mareva
order.

[4]

For the following reasons, I would allow the appeal and restore the
    finding of contempt. However, as Careys actions were prompted by an error of
    judgment and did not amount to a deliberate violation of the
Mareva
order, I would limit the sanction to the payment of costs

FACTS

[5]

Sabourin and his companies were involved in off-shore securities. Laiken
    was Sabourins client and had invested substantial sums in off-shore securities
    on his advice. In 2000, Sabourin and Laiken became involved in protracted
    litigation. Sabourin sued Laiken for $364,000 alleging a deficit in her margin
    account, and Laiken counterclaimed in 2001 for over $800,000 alleging fraud.
    The matter proceeded to discovery. In the course of the litigation, Laiken made
    several
ex parte
requests for orders freezing Sabourins assets but
    these orders were either refused or set aside for non-disclosure.

[6]

The
ex parte Mareva
order at issue on this appeal was obtained
    by Laiken on May 4, 2006. The order was very broad in its terms. It enjoined
    Sabourin and the other named defendants from disposing of, or otherwise
    dealing with, any of their assets and it contained no exceptions to deal with
    payment of legal fees or living expenses. The order also enjoined any person 
    with knowledge of this Order to prevent the sale, disposition, withdrawal,
    dissipation, sale, assignment, dealing with, transfer, conveyance, conversion,
    encumbrance or diminishment of the assets and specifically included money held
    in trust accounts. The order did not contain the usual term requiring the
    named parties to disclose their assets.

[7]

The
ex parte
order was continued a week later. It was agreed by
    the parties and accepted by the judge hearing the motion that the order
    required variation to allow for payment of legal fees, living and other routine
    expenses.  The judge left it to the parties to work out appropriate terms but
    no steps were taken to amend the formal order.  The parties agreed to certain
    terms but failed to agree on the payment of ordinary third party creditors.
    That issue was the subject of a further continuation motion argued on September
    14, 2006, when a decision was reserved.

[8]

On September 21, 2006, Sabourin delivered to Carey a cheque for $500,000
    with no instructions. Carey later testified that the cheque was a surprise.
    He attempted to reach Sabourin but was unable to do so. Following Law Society
    regulations, Carey deposited the cheque in his trust account. On September 25,
    2006, the decision to continue the
Mareva
order and refuse a provision
    allowing Sabourin to pay third party creditors was released. Sabourin
    subsequently called Carey and instructed him to use the funds to settle with
    the Bill Brown group of creditors. Carey informed Sabourin that he could not do
    so as that would violate the terms of the
Mareva
order. Sabourin then
    instructed Carey to attempt to settle with Laiken in the range of $175,000 to
    $250,000. Within a few days of that conversation, there was a conference call
    involving Sabourin, Brown and Carey. Sabourin informed Brown that Carey held
    $500,000 in trust. Sabourin said that  the money was intended for Brown, but
    that the
Mareva
order prevented Carey from releasing the funds.

[9]

Carey attempted to settle with Laikens solicitors but was unable to do
    so. He did not reveal that he had $500,000 in his trust account. In late
    October, 2006, Carey reported to Sabourin that he was unable to reach a
    settlement with Laiken. Sabourin instructed Carey to return the funds and Carey
    did so after deducting $60,000 for past and future legal fees.

[10]

In
    early 2007, Sabourin called Carey to inform him that because of proceedings
    before the Ontario Securities Commission, he wished to terminate Careys
    retainer and to retain new counsel. However, Sabourin did not follow through
    and Carey remained the counsel of record on the Laiken matter.

[11]

Sabourin
    then went out of business and disappeared.

[12]

In
    October 2007, Brown obtained judgment against Sabourin and his companies and
    obtained a receiving order by way of equitable execution. The receiver demanded
    payment from Carey of the $500,000 trust money. Carey responded that he had
    paid that money back to Sabourin.

[13]

On
    October 27, 2009, Laiken commenced an action against Carey alleging,
inter
    alia
, negligence in relation to his return of the $440,000 to Sabourin in
    breach of the
Mareva
order.

[14]

In
    November 2007, the Sabourin - Laiken action came on for trial. Carey appeared
    and indicated he had no instructions and was permitted to withdraw. The matter
    proceeded as an uncontested trial. Sabourins claim against Laiken was
    dismissed and Laiken was awarded judgment against Sabourin for $820,000 plus
    interest and costs of almost $300,000. The trial judge accepted Laikens
    evidence that she had lost her entire net worth as a result of Sabourins
    fraudulent conduct.

CONTEMPT PROCEEDINGS

[15]

Laiken
    launched her motion for contempt against Carey on December 15, 2010. She was
    initially joined by counsel for Brown but he appears not to have participated
    in the proceedings. Carey responded with a motion for summary judgment to
    dismiss Laikens 2009 civil action. The primary evidence filed in support of
    the contempt motion was the affidavit of Paul McGrath, an officer of the
    receiver in the Brown action. Carey filed a responding affidavit setting out in
    some detail his defence to the contempt motion. McGrath failed to attend to be
    cross-examined and his affidavit was struck. Laiken did not cross-examine Carey
    on his affidavit. The parties agreed that the exhibits to the McGrath affidavit
    be admitted.

[16]

The
    matter was heard in mid-September 2011 on the basis of the exhibits to the
    McGrath affidavit and Careys affidavit evidence. Carey did not attend but was
    represented by counsel. The motion judge released her reasons on October 12,
    2011, finding Carey in contempt. She dismissed Careys summary judgment motion
    on the basis that there was a genuine issue for trial as to whether Laiken had
    suffered any damages as a result of Carey returning the $440,000 to Sabourin.

[17]

The
    motion judge rejected Careys claim that the
Mareva
order was unclear,
    stating, at para. 27:

With respect, the
Mareva
Order could not be clearer:  it plainly prohibited any and all
    dealings whatsoever with any monies belonging to the Sabourin defendants,
    expressly including any held in trust for them.

[18]

The motion judge pointed out that Careys evidence made it clear that
    he realized that the money in his trust account was subject to the
Mareva
order. He knew that it had to be varied to allow for payment of
    routine expenses and that he could not pay third party creditors as requested
    by Sabourin. She found that it was also clear that he transferred funds from
    his trust account, an act prohibited by the terms of the
Mareva
order.

[19]

Carey also
asserted
that to retain the funds would
    be to shelter them improperly from creditors, because he was bound by
    solicitor-client privilege not to reveal the trust funds.. The motion judge
    considered and rejected this defence. In her view, this did not explain why he
    could not have simply left the trust funds where they were secure (para. 38).

[20]

The motion judge concluded, at para. 42:

I am satisfied beyond a reasonable doubt that Mr.
    Carey knowingly and deliberately breached and is therefore in contempt of the
Mareva
Order.

The motion judge then directed the
    parties to appear before her pursuant to rule 60.11
,
the relevant portions of which provide as follows:

Motion
    for Contempt Order

60.11  (1)  A
    contempt order to enforce an order requiring a person to do an act, other than
    the payment of money, or to abstain from doing an act, may be obtained only on
    motion to a judge in the proceeding in which the order to be enforced was made.



Content
    of Order

(5)  In disposing of a motion
    under subrule (1), the judge may make such order as is just, and where a
    finding of contempt is made, the judge may order that the person in contempt,

(a) be imprisoned for such period
    and on such terms as are just;

(b) be imprisoned if the person
    fails to comply with a term of the order;

(c) pay a fine;

(d) do or refrain from doing an act;

(e) pay such costs as are just; and

(f) comply with any other order that
    the judge considers necessary,

and may grant leave to issue a writ of sequestration
    under
rule 60.09
against the
    persons
property.



Discharging or Setting Aside Contempt
    Order

(8)  On motion, a judge may discharge, set aside, vary or
    give directions in respect of an order under subrule (5) or (6) and may grant
    such other relief and make such other order as is just.

[21]

The motion judge explained what would happen in the following terms, at
    para. 43:

Mr. Careys attendance is required at the hearing
    although he is not obliged to call any evidence or testify.  At that
    hearing, if he wishes, Mr. Carey shall have the opportunity to present any
    further evidence, including
viva voce
evidence,
    and make any submissions that he wishes to make.  The plaintiff shall also
    have the opportunity to file any further material, call evidence, cross-examine
    at the hearing, and make submissions.  I shall take all of this into
    account in making any order under
Rule 60.11 (5)
and
(8)
of the
Rules of Civil Procedure
.

[22]

Carey filed a notice of appeal from the contempt finding and moved for
    a stay of that order and any further proceedings pending the determination of
    his appeal.  I dismissed the stay motion on the ground that the appeal should
    not be used to interrupt and fragment the Superior Court proceedings: 2011 ONCA
    757. I pointed out, at para. 7, that if the appeal from the contempt finding
    succeeded that would end the matter but if it failed, there would still be an
    appeal from the sanction imposed and that it was preferable to await the
    completion of proceedings and determine all issues on a complete record. This
    follows the practice used in criminal appeals where the court cannot entertain
    an application for judicial interim release until the sentence has been
    imposed. As the motion judge relied on para. 9 of my reasons, I quote it here:

To stay the contempt proceedings at this stage
    would also interfere with the design of the commonly followed procedure that is
    permitted, if not prescribed, by
rule 60.11 (5)
and
(8)
, of dividing a contempt proceeding into two phases, the first dealing
    with the issue of whether the party is in contempt and the second dealing with
    the issue of sanction. Until the order has been made under 60.11 (5), the
    contempt proceedings have not come to their final conclusion. Until the sanction
    has been imposed, the judge has not expressed his or her final view of the
    case. It is clear from the passage quoted above from the motion judges reasons
    that she has not yet completed her adjudication of the contempt proceedings.
    Indeed, her specific reference to
rule 60.11 (8)
indicates that she remains open to a wide range of possible outcomes.
    Until she completes her work, this court will not know if the motion judge
    considered the contempt to be serious or trivial or how the judge intended to
    use the sanction of contempt to bring about compliance or to punish the
    contemnor. These are elements integral to the nature and character of the
    contempt proceeding and essential to an appellate courts full appreciation of
    the disposition under appeal.

[23]

When the matter resumed before the motion judge, Carey led further
    evidence. He filed an affidavit sworn by Alan Lenczner Q.C., a highly respected
    member of the litigation bar, and Carey testified to amplify his defence to the
    contempt allegation. The matter proceeded over two days in December 2011 and
    July 2012. Laiken also filed affidavit evidence and testified.

[24]

Lenczners affidavit stated that by returning the money in excess of
    that required to cover legal fees, Carey had acted in a manner  that was
    consistent with the practice of counsel generally.  Lenczner maintained that
    position when cross-examined.

[25]

In his oral evidence, Carey provided a full account of the proceedings
    between Laiken and Sabourin and reiterated and elaborated on the position he
    had advanced earlier. Carey testified that he believed that to retain the money
    in his trust account under the veil of solicitor-client privilege would only
    serve to shelter the money from creditors. He testified that he thought Laiken
    had essentially admitted liability for Sabourins claim on discovery, that her
    claim against Sabourin was weak, that he felt that the May 2006
Mareva
order was an improper tactical maneuver, and that the variations
    effectively gutted the order:

Returning these monies did not constitute a
    violation of the order because the order as varied, the order was changed
    completely in terms of what could or could not have been done. It simply
    doesnt exist anymore.

Carey further testified:

I honestly believed at the time that I was doing
    this that I was acting completely properly. I was abiding by my obligations as
    a solicitor, both in terms of my obligations to the client and my obligations
    as an officer of the court and quite frankly, I still do.

[26]

At the conclusion of the evidence and argument, the motion judge
    announced that, for reasons to follow, her previous finding of contempt was set
    aside. In her written reasons released on December 24, 2012, she noted that rule
    60.11(8) permits a judge to discharge, set aside, vary or give directions
    with respect an order. She cited para. 9 of my reasons on the stay application as
    authority to allow Carey to reopen the contempt finding. She added that in any
    event, she would have granted leave to reopen pursuant to rule 59.06(2) as to
    allow Carey to respond more fully to the serious allegation of contempt was
    necessary to avoid a miscarriage of justice.

[27]

The motion judge concluded, at para. 36, that she had a reasonable
    doubt as to whether the terms of the
Mareva
order
    were completely clear to Mr. Carey, and I am not satisfied beyond a reasonable
    doubt that Mr. Careys interpretation of the [
Mareva
] order was deliberately and willfully blind.  As it must be clear to
    a party exactly what must be done to be in compliance with the terms of an
    order and as [a]ny doubt must be resolved in favour of Mr. Carey, contempt
    had not been shown beyond a reasonable doubt.

[28]

She added, however, at paras. 38 and 39, that she made no finding as to
    the correctness or reasonableness of Careys interpretation of the
Mareva
order. She left open the possibility that Carey might be found, on the
    civil balance of probability standard, to have been inadvertent or negligent,
    but added that did not amount to contempt: Unprofessional or sloppy practice,
    if that is ultimately found to be the case here, is not contempt of court.

ISSUES

[29]

Laiken
    raises four issues on appeal:

1.

Did the motion
    judge err in setting aside her initial finding of contempt?

2.

Was the Lenczner
    affidavit properly admissible?

3.

Did the motion
    judge err in finding that Careys conduct did not amount to contempt?

4.

If Carey was in
    contempt, what is the appropriate sanction?

ANALYSIS

1.

Did the motion judge err in setting aside her initial finding of
    contempt?

[30]

In
    my view, the contempt proceedings in this case took an uneven course and the
    procedure that was followed in this case should not be emulated in the future.
    The problem started when Laikens main deponent, Paul McGrath, the officer of
    the receiver in the Brown action, failed to attend to be cross-examined. Carey
    made an understandable but, as it turned out, unwise tactical decision not to
    attend, testify or to offer other evidence on the contempt hearing. As Carey
    had provided an affidavit that offered a point-by-point response to the McGrath
    affidavit, there was a clear factual foundation for a contempt finding which
    the motion judge made. Carey then used the second stage of the proceedings to
    attack the motion judges findings and reasons for finding him in contempt.

[31]

As
    both the motion judge and Carey relied on my reasons in the stay motion, it is
    appropriate for me to offer the following clarification. I do not read my
    reasons to say - and I certainly did not intend them to say  that rule 60.11
    contemplates a judge revisiting and reversing an initial finding of contempt.
    What I intended to say was that until a judge has decided
both
the
    issue of contempt
and
the issue of sanction, an appellate court does
    not have a complete record of the case. Appeals should only come to this court
    on a complete record and in contempt, as in other areas, we should avoid a
    fragmented or piece-meal approach to hearing appeals before the  first instance
    court has completed its adjudication of all issues.

[32]

In
    my view, neither rule 60.11 nor the case law contemplates the procedure that
    was followed in this case. A party faced with a contempt motion is not entitled
    to present a partial defence and then, if the initial gambit fails, have a
    second bite at the cherry. In contempt matters, as in all other areas of litigation,
    the interests of justice are best served if the principle of finality is
    respected. Parties have one chance to present their case and, absent
    exceptional circumstances, they must live with the consequences of the tactical
    decisions they have made in deciding what evidence and what arguments to
    present to the court.

[33]

The
    finality principle must, however, be applied in a way that takes into account
    the fact that contempt motions typically involve two phases. The first phase
    deals with whether the party is in contempt. When that decision is made, the
    finding is final. If the party is found to be in contempt, the issue of
    sanction is usually dealt with at the second phase. It is not until both phases
    are complete that it is appropriate to proceed with an appeal of the contempt
    finding. These two phases correspond with the practice in criminal proceedings
    of dividing the issues of conviction and sentence.

[34]

I
    would add two qualifications. First, as the ultimate aim of the law of civil
    contempt is to secure respect for and compliance with court orders, there must
    be a certain element of flexibility in the way it is applied. A finding of
    contempt may prompt the contemnor to comply with the order and that may prompt
    the judge to set aside the initial finding of contempt. That is contemplated by
    rule 60.11. See
Chiang (Trustee of) v. Chiang
, 2009 ONCA 3, 93 O.R.
    (3d) 483, at para. 118: These rules give to the court an ongoing supervisory
    role over a civil contemnor together with the discretion to vary or even
    discharge a contempt order if the contemnor purges the contempt. However, in
    such a case, the contempt finding is not set aside because the judge has second
    thoughts about the contempt finding or because the contemnor offers a different
    or more ample defence. Rather, it is set aside because the contempt proceedings
    have had their intended effect of securing compliance with a court order.
    Obviously, that did not occur in the present case.

[35]

The
    second qualification is that contempt proceedings are subject to the standard principles
    that allow parties to re-open findings in exceptional circumstances where there
    is a sound explanation for why the fresh evidence or new facts were not
    presented to the court before the contempt order was made.

[36]

In
    my view,
Belanger v. McGrade Estate
(2003), 65 O.R. (3d) 829 (Sup. Ct.)
    was such a case. A solicitor had been found in contempt and sentenced to jail
    for failing to comply with court orders in an estate matter. He did not appear
    to defend himself on the contempt motion. After being found in contempt he deposed
    that he had been misled throughout the proceedings by the other lawyer, that he
    had been told that it was unnecessary for him to attend the contempt motion,
    and that the orders he failed to obey were obtained without his knowledge or
    consent. The other lawyer did not deny those facts and the contempt order was
    set aside under rule 60.11(8). I would distinguish
Belanger
from the
    present case on the basis that it dealt with facts that only came to light
    after the contempt finding had been made through no fault of the alleged
    contemnor.

[37]

In
    the case before us, the motion judge relied on
rule 59.06(2):

Setting
    Aside or Varying

59.06(2)  A party who seeks to,

(a) have an order set aside or
    varied on the ground of fraud or of facts arising or discovered after it was
    made;

(b) suspend the operation of an
    order;

(c) carry an order into operation;
    or

(d) obtain other relief than that
    originally awarded,

may make a motion in the proceeding for
    the relief claimed.

[38]

While I agree that this rule applies to contempt proceedings, I
    respectfully disagree with the motion judge that the facts of the case before
    her brought it within its reach. In particular, Carey was not seeking to set
    aside or vary the contempt finding on the ground of fraud or of facts
    discovered after it was made but rather on the basis of evidence that was
    clearly available for the initial hearing.

[39]

I
    conclude, accordingly, that the procedure followed in this case was flawed and
    that Carey should not have been permitted to re-open the finding of contempt.

2.

Was the Lenczner affidavit properly admissible?

[40]

It
    follows from what I have already said that, to the extent Carey relied on the
    Lenczner affidavit for the issue of contempt, it should have been tendered on
    the initial phase as it was not evidence of a fact discovered after the initial
    order.

[41]

It
    is also my view that, in any event, the Lenczner affidavit was not admissible
    on the issue of contempt. As I will explain in the next part of these reasons,
    the question of whether or not Careys conduct amounted to contempt essentially
    turns on the interpretation of the
Mareva
order and the legal test for
    contempt. Those, in my view, are legal issues for the court to decide on the
    basis of legal argument, and while Carey is entitled to advance all the legal
    arguments he can muster, he cannot advance what are essentially legal arguments
    under the guise of expert evidence.

[42]

However,
    those aspects of the Lenczner affidavit addressing the standards and common
    understandings of the litigation bar could be properly admitted as evidence favouring
    leniency on the issue of sanction.

3.

Did the motion judge err in finding that Careys conduct did not amount
    to contempt?

[43]

Although
    I have concluded that the motion judge erred procedurally in setting aside her
    initial finding of contempt, we have her findings on the complete record and
    the matter has been fully argued before this court. Therefore, I propose for
    the sake of completeness to consider whether Careys conduct, as found by the
    motion judge, did or did not amount to contempt.

[44]

Carey
    offered a number of explanations that he claims justified returning the trust
    money to his client. Carey testified that:

·

in his opinion, Laiken had little chance of success in the action
    and the
Mareva
order was an improper tactical move on her part to gain a
    tactical advantage;

·

the form of the
Mareva
order was deficient in that it
    failed to provide for payment of legal costs, living expenses and disclosure of
    assets;

·

the variations agreed to by counsel had gutted the order: 
It simply doesnt exist anymore; and

·

because the money remained Sabourins property, the transfer from
    the trust account was not prohibited.

[45]

The
    motion judge appears to have accepted the thrust of these submissions in her
    December 24, 2012 reasons in concluding, at para. 36, that she was not
    satisfied beyond a reasonable doubt that the terms of the May 4, 2006
Mareva
order were completely clear to Mr. Carey.

[46]

In
    my respectful view, that conclusion reflects legal error.

[47]

It
    is well-established that court orders must be respected, even if they were
    improperly or improvidently granted. See
Henco Industries Limited v.
    Haudenosaunee Six Nations Confederacy Council (
2006), 82 O.R. (3d) 721
    (C.A.) at para. 90: 
The law is clear that an order of the court,
    however wrong, must be obeyed until it is reversed or varied (citation
    omitted).
Whatever opinion Carey had as to the likely outcome of
    the Laiken-Sabourin litigation or as to the propriety or form of the
Mareva
order, he was bound to comply with it. He could and did, as Sabourins counsel,
    move to set aside or vary the order but unless the order was set aside, he was
    bound to comply with it.

[48]

I
    fail to see how the alleged deficiencies in the order could render unclear the
    term of the injunction prohibiting the transfer of trust funds held on
    Sabourins behalf. The failure to allow payment of living expenses or legal
    costs or to provide for disclosure of assets had no impact on this term. The
    order may well have been unduly restrictive, but that does not amount to a lack
    of clarity. The order exhibited none of the characteristics typically found in
    orders lacking clarity: see
Culligan Ltd. v. Fettes
2010 SKCA 151, 326
    D.L.R. (4th) 463, at para. 21. It was missing no essential details about its
    application; it did not use overly general or unclear language; and nothing had
    occurred that could obscure its meaning. I would add on this point that as
    Sabourin had instructed Carey to use the $500,000 to deal with creditors, it is
    very difficult to see how he or Carey could, at the same time, maintain that he
    needed it for his day-to-day living expenses.

[49]

I
    see no merit in the assertion that because of the variations to the order, it
    no longer existed or that it lacked sufficient clarity. As the motion judge
    found in her initial reasons, the order could not be clearer and it plainly
    prohibited any and all dealings in money belonging to Sabourin, including
    money held in trust. She pointed out that Careys own actions indicate that he
    knew the order still had binding effect. Careys unsuccessful effort to secure
    a variation to permit payments to third party creditors and subsequent refusal
    to use the trust money as instructed by his client to settle the Brown claims
    demonstrates that he knew the
Mareva
order, as varied to permit
    payment of legal and ordinary living expenses, remained in force and had
    binding effect.

[50]

Careys
    fourth point, that the money remained Sabourins property and therefore by returning
    it he was not caught by the order, is without merit. The
Mareva
order
    enjoined the withdrawal, dissipation  dealing with, transfer  or
    diminishment of the assets and specifically included money held in trust
    accounts. The whole purpose of this and other
Mareva
orders is to
    prevent the defendant and others having knowledge of the order from dealing
    with the defendants property so as to defeat the courts process. I fail to
    see how the fact that Sabourin retained beneficial ownership could possibly
    defeat the application of these terms to the money Carey held in his trust
    account.

[51]

I
    now turn to the significance of the fact that Carey testified that he honestly
    believed that he was acting in a manner consistent with his duty to his client
    and his duty to the court when he returned the trust money to Sabourin.

[52]

I
    begin by pointing out what appear to me to be fundamental flaws in Careys
    analysis of the interpretation and application of the
Mareva
order.

[53]

The
    basic premise of a
Mareva
order is that the defendant is a rogue bent
    on flouting the process of the court. That is said to justify the exceptional
    and drastic measure of freezing the defendants assets before trial and before
    judgment. A finding that Sabourin was a rogue bent on flouting the courts
    process was implicit in the grant of the
Mareva
order and Carey was
    bound to act accordingly. If that is the starting point, it is difficult to see
    how Carey could reasonably have thought that returning the money to Sabourin
    would render it subject to execution while retaining it in the trust account
    would shelter it from execution. It was much more likely that the money would
    have been available for execution had Carey held the money in his trust account
    rather than returning it to his client who then behaved in precisely the manner
    the
Mareva
order predicted: he disappeared without a trace taking all
    of his assets with him.

[54]

Carey
    asserts that it would have been wrong for him to have left the money in his
    trust account because that would shelter it from creditors under the protection
    of solicitor-client privilege. This ignores the fact that Carey knew that
    Sabourin had revealed to Bill Brown who represented several third party
    creditors the fact that there was $500,000 sitting in his lawyers trust
    account. Not surprisingly, the receiver Brown had appointed used that
    information in an attempt to recover the funds, only to find that they had been
    returned to Sabourin.  As Sabourin had already disclosed to third party
    creditors that Carey held $500,000 in trust to be used to pay or settle
    creditors claims, it was virtually inevitable that at some point, his
    creditors, likely including Laiken, would come after the money had it remained
    in Careys trust account. I have difficulty accepting Careys assertion that
    there was no way that Laiken or her counsel could learn that he had his
    clients money in his trust account in the face of his evidence that his client
    had already disclosed that fact, albeit to another creditor. I note here that
    whether Laiken would have gained from an execution brought by other creditors
    is a contentious issue upon which I express no view. The point remains,
    however, that as was predicable from Sabourins conduct and, as events proved, had
    Carey retained the money in his trust account, he would not have sheltered it from
    execution.

[55]

In
    my view, Carey committed an act that violated both the letter and the spirit of
    the
Mareva
order.

[56]

The
    motion judge was not satisfied beyond a reasonable doubt that Careys belief
    that he was entitled to return the money to his client amounted to a deliberate
    or willfully blind breach of the
Mareva
order. I accept that finding
    and  now turn to consider the legal issue that arises: was the motion judge
    correct in finding that it follows from her finding  that Carey was not in
    contempt?

[57]

It
    is well-established that while the act that contravenes a court order must be
    intentional to constitute civil contempt, it is not necessary to show that the
    act was deliberately contumacious.  This is not a case of criminal contempt
    where public defiance of the courts authority is an essential element and, as
    held in
United Nurses of Alberta v. Alberta (Attorney General),

[1992] 1 S.C.R. 901,
at p. 933, it must be proved beyond a
    reasonable doubt that the accused defied or disobeyed a court order in a public
    way (the
actus reus
), with intent, knowledge or recklessness as to the
    fact that the public disobedience will tend to depreciate the authority of the
    court (the
mens rea
). This is a case of civil contempt where
[a] person who simply breaches a court order ... is viewed as having
    committed civil contempt:
United Nurses
, at p.
    931.

[58]

In
TG Industries Ltd. v. Williams
, 2001 NSCA 105, 196 N.S.R. (2d) 35,
    bolstered by a thorough review of what he described, at para. 19, as the
long line of authority for the view that intention to disobey is not
    an element of civil contempt,
Cromwell J.A. (then a member of the Nova
    Scotia Court of Appeal), explained the governing principle in the following
    way, at para. 17:

[I]
n civil contempt, it is important to
    distinguish between an intentional act and knowledge that the act is
    prohibited.  The core elements of civil contempt are knowledge of the
    order and the intentional commission of an act which is in fact prohibited by
    it.  The required intention relates to the act itself, not to the
    disobedience; in other words, the intention to disobey, in the sense of
    desiring or knowingly choosing to disobey the order, is not an essential
    element of civil contempt.

[59]

As Cromwell J.A. pointed out, at para. 11, to hold that a party could only
    be found in contempt 
if it intentionally and wilfully
    acted contrary to the requirements of the order would put the test for civil
    contempt too high as [i]f accepted, this view would mean that mistakes
    of law would be a defence to an allegation of civil contempt but not to a
    murder charge.

[60]

This court applied the same principle in
Sheppard v.
    Sheppard
(1975), 12 O.R. (2d) 4, at p. 8:

[I]n order to constitute a contempt it is not
    necessary to prove that the defendant intended to disobey or flout the order of
    the Court.  The offence consists of the intentional doing of an act which
    is in fact prohibited by the order. The absence of contumacious intent is a
    mitigating but not an exculpatory circumstance.

[61]

Similarly, it has been held that even a party who acts on legal advice
    may be found in contempt if the conduct violates terms of a court order: see
Re
    Tyre Manufacturers' Agreement
, [1966] 2 All E.R. 849, at p. 862;
Canada
    Metal Co. Ltd. v. C.B.C. (No.
2)
(1974), 48 D.L.R. (3d) 641, at p. 661, affd
    65
D.L.R. (3d) 231 (Ont. C.A.). Sabourin could not have
    avoided a finding of contempt by relying on Careys erroneous legal advice and
    neither should Carey because of his erroneous interpretation of the order.

[62]

Carey
    knew of the order and he violated it. He did not desire or knowingly choose to
    disobey the order, but the lack of contumacious intent is a mitigating factor
    and not an essential element of civil contempt.

[63]

In
    his capable submission on behalf of Carey, Mr. Schindler cites English
    authority dealing with contempt allegations against third parties who have
    acted contrary to an order made against a different party. It has been held
    that an intention on the part of the third party to interfere with or impede
    the administration of justice is an essential ingredientto be established to
    the criminal standard of proof:
Attorney General v. Punch Ltd.,
[2003] 1 A.C. 1046, at para. 87. This principle has been applied to banks
    alleged to have violated
Mareva
injunctions as third parties with
    knowledge of the order: see
Z. Ltd. v. A-Z and AA-LL,
[1982] 2 W.L.R.
    288 (C.A.), at p. 305: Carelessness or even recklessness on the part of the
    banks ought not in my opinion to make them liable for contempt unless it can be
    shown that there was indifference to such a degree that was contumacious.

[64]

I
    am not persuaded that as the solicitor acting for Sabourin in relation to the
Mareva
order, Carey falls into the same category as the third parties discussed in
    those cases who were strangers to the litigation bound to respect the court
    order simply because they had knowledge of it.  As the solicitor of record and
    as an officer of the court, Carey must be held to a higher standard.  The
    solicitor-client bond creates a community of interest between Carey and
    Sabourin that is plainly distinguishable from the situation of a stranger to
    the litigation who is apprised of the court order. As an officer of the court,
    a solicitor of record is duty-bound to take scrupulous care to ensure respect
    for court orders. In my view, as the solicitor of record in the case, Carey
    should be held to the same standard of compliance as his client who was a
    party.

[65]

I
    conclude, accordingly, that the motion judge erred in law in finding that
    because Carey did not deliberately breach the
Mareva
order, he could
    not be found in contempt.

4.

If Carey was in contempt, what is the appropriate sanction?

[66]

While
    it is my view that Careys conduct did breach the May 4, 2006
Mareva
order, I accept that Carey actions were prompted by an error in judgment and
    not by any deliberate disrespect for the court or its process.  On this issue,
    the Lenczner affidavit is relevant and admissible.

[67]

Laiken
    does not ask that Carey be imprisoned or fined but submits that the court
    should order Carey to pay her $440,000 by way of compensation. I do not intend
    to review the authorities as to whether or when a compensation order is an
    appropriate sanction for contempt as it is my view that, even if this court
    does have the authority to require compensation as the sanction for contempt, no
    such order should be made in the circumstances of this appeal for the following
    procedural reason.

[68]

It
    is clear from the motion judges reasons refusing to grant summary judgment to
    dismiss the action that Laikens claim for damages raises contentious issues of
    fact and law, including issues as to causation. It would be difficult to come
    to grips with those issues in the context of a contempt motion which is
    designed to be an expeditious and focused proceeding. To the extent that
    violation of the
Mareva
order is an element of Laikens claim against
    Carey, she will have the benefit of our finding in this contempt proceeding,
    but she must pursue her claim in a proceeding that affords a proper procedural
    framework for its adjudication.

[69]

In
    my view, the appropriate sanction is to require Carey to pay Laiken the costs
    of the contempt proceedings. As I accept the finding that Careys breach of the
Mareva
order was not deliberately contumacious, I would order costs on
    a partial indemnity basis.

DISPOSITION

[70]

I
    conclude that the motion judges decision of September 10, 2012 to set aside
    her initial October 17, 2011 finding of contempt should itself be set aside and
    her order of October 17, 2011 should be restored for two reasons. First, the
    motion judge erred in permitting Carey to attack her initial finding of
    contempt, and second, and in any event, she erred in the legal test she applied
    to Careys conduct.

[71]

Laiken
    is entitled to her costs on a partial indemnity scale. Both parties asked for
    approximately $20,000 for costs of the appeal and I fix the costs in that
    amount. If the parties are unable to agree as to the costs of the proceeding in
    the Superior Court, they may file brief written submissions to this panel.

Robert J. Sharpe
    J.A.

I agree M. Rosenberg
    J.A.

I agree E.E. Gillese
    J.A.

Released: August 27, 2013


