REDDY v SAROYA

This decision arose in the context of a sanctions hearing following findings of civil contempt for failure to comply with Undertakings and production obligations. After some of the contempt findings were set aside on Appeal, and others were purged, the Court was required to determine the appropriate sanction for the remaining contempt findings. The Plaintiff sought to strike the contemnor’s pleadings, while the contemnor argued that such a sanction would be disproportionate and that lesser remedies remained available.

Associate Chief Justice Nixon considered the Court’s discretion under Rule 10.53, which set out the penalties and sanctions available for civil contempt, including imprisonment, fines, striking pleadings, staying or dismissing proceedings, prohibiting evidence, and costs. The Court reviewed the principles governing contempt sanctions and noted they must be proportionate and reflect both the gravity of the contempt and the contemnor’s personal culpability. Nixon A.C.J. also observed that civil contempt sanctions were generally coercive, rather than punitive, although punishment and deterrence remained relevant considerations. The Court further emphasized that contempt was a serious remedy that should not be used routinely to resolve disputes over Undertakings or production.

Applying these principles, the Court declined to strike the contemnor’s Statement of Defence. Associate Chief Justice Nixon accepted that the failure to comply with Undertakings had affected the Plaintiff’s ability to prove its case, but concluded that striking pleadings would have been an extreme sanction and was not proportionate in the circumstances. The Court instead imposed an $8,000 fine payable to the Clerk of the Court, and awarded costs pursuant to Rule 10.53(2), including solicitor-client costs of $69,977 for the third contempt Application, and Schedule C costs of $5,400 and $10,800 for the first and second contempt Applications. The Court also observed that any prejudice arising from the missing production could be addressed at Trial, including through a possible adverse inference.