473440 ALBERTA LTD v LENACO HOMES MASTERBUILDER INC, 2017 ABQB 538
5.33: Confidentiality and use of information
6.11: Evidence at application hearings
8.17: Proving facts
9.22: Application that judgment or order has been satisfied
10.51: Order to appear
10.52: Declaration of civil contempt
10.53: Punishment for civil contempt of Court
The Plaintiffs alleged that the Defendants had moved assets out of a corporation to exclude the Plaintiffs from the business. The Action was one of nine Actions between the same or similar parties. In a receivership hearing, the parties agreed to a preservation Order and a production Order requiring the disclosure of one the corporation’s financial records. The Orders contemplated a confidentiality agreement, but it was not consummated. The parties exchanged communications and records and agreed that the communications were protected by an implied undertaking. As the litigation continued, counsel discussed whether it was appropriate to amend the terms of the production Order or to deem it satisfied pursuant Rule 9.22. A 48-page report containing receivership records came into the possession of counsel in one of the other related Actions. Counsel for 473440 Alberta Ltd. (“473440”) and Reid Worldwide Corporation (“Reid”) unsuccessfully attempted to file and rely upon the report. Two of the Defendants then applied to hold 473440 and Reid and their counsel in civil contempt for breaching Rule 5.33 and the terms of the confidentiality provision in the production Order.
Justice Feehan noted that no Applications were made with respect to Rule 9.22 nor Rule 6.11 in order to use evidence taken from one Action in another. Feehan J. referred to leading authorities and noted that Courts have inherent jurisdiction to deal with contempt of their Orders. The modern test for civil contempt requires proving three elements beyond a reasonable doubt: (1) that the Order alleged to have been breached must state clearly and unequivocally what should and should not be done; (2) that the alleged contemnor must have had actual, or inferred, knowledge of it or have been wilfully blind to the Order; and (3) that the alleged contemnor must have intentionally done the prohibited act, or intentionally failed to do the required act.
Justice Feehan noted that the mens rea necessary to be held in contempt was simply an intention to commit the prohibited act, or intentional, wilful, or reckless failure to perform a required act. His Lordship further noted that Rule 10.52(3)(a) also informs this analysis in that a person may be held in civil contempt if they knowingly and “without reasonable excuse” do not comply with an Order. Feehan J. noted that the case law is unresolved with respect to what the onus is with respect to a “reasonable excuse”, given that Rules 10.51 and 10.52 require that the alleged contemnor must appear to “show cause” why they should not be held in contempt. Further, despite any onus that may lay on an Applicant in a contempt Application, Feehan J. noted that where the Applicant fails to make its case for contempt, a Court may still invoke its inherent jurisdiction to make a contempt Order where justice and “respect for an undertaking of confidentiality” demands a sanction.
In this case, His Lordship found that the Applicant failed to prove the first and second elements of contempt beyond a reasonable doubt, but did satisfy the third element. Justice Feehan also stated that, while the Respondents actions were “sloppy” in failing to make an Application to receive relief from Rule 5.33, to vary the Order under Rule 9.22, or to make use of the evidence under Rule 6.22, there was a reasonable excuse for the disclosure in that the production Order was insufficiently precise.
Feehan J. dismissed the contempt Application but noted that some procedural relief was required in the circumstances to “create an even playing field as the action continues, and to uphold the rule of law, and the dignity and processes of the Court”. His Lordship considered the potential relief available in a contempt Application pursuant to Rules 10.52 and 10.53, and ordered that the report be subject to a sealing Order, that it be struck from the record in any Actions in which it was improperly filed, and that no further use of it could be made in those Actions until an Application under Rule 5.33, 6.11 or 9.22 was granted.View CanLII Details