Background
Mohammad Mahdi Tajbakhsh was the principal and directing mind of three companies involved in a dispute with the respondents over the governance of three limited partnerships. After prevailing at trial, the respondents obtained an order requiring the companies to deliver the partnerships’ books, records, accounts, and assets and to account for funds received after April 8, 2021. The companies failed to provide significant records, prompting the respondents to bring a contempt motion. Although Tajbakhsh was not a defendant in the underlying action, the respondents pursued him personally under r. 60.11(6) of Ontario’s Rules of Civil Procedure.
During the contempt proceedings, the motion judge found that the respondents’ failure to disclose records obtained from the partnerships’ accountant, and their subsequent use of those records to develop additional evidence, breached the contemnors’ rights under ss. 7 and 11(d) of the Canadian Charter of Rights and Freedoms. She excluded evidence derived from those records and dismissed two contempt allegations that depended on it, but found Tajbakhsh and the companies liable for other intentional failures to comply with the production order.
As the contempt sanction, the motion judge awarded the respondents full-indemnity costs, reduced by 25% to remove work associated with the excluded evidence, plus costs of the sanction motion. She separately awarded the corporate defendants approximately $258,000 for their successful Charter motion, but excluded Tajbakhsh because he had not been named as a moving party. She also refused to set that award off against the contempt sanction. Tajbakhsh appealed only the refusal to permit set-off, seeking a reduction of $257,998.38 from the costs he was required to pay.
The Court’s Holding
The Court of Appeal dismissed the appeal. It held that the motion judge had not deprived Tajbakhsh of a meaningful Charter remedy: excluding the tainted evidence narrowed the conduct for which he and the companies could be held in contempt and resulted in the dismissal of two allegations. The motion judge also accounted for the Charter breaches when setting the sanction by reducing the respondents’ claimed full-indemnity costs by 25%.
The court found no reversible error in excluding Tajbakhsh from the Charter-motion costs award because he was not named as a moving party. It further upheld the motion judge’s discretionary conclusion that it would not be just and equitable to dilute a costs award imposed as a contempt sanction through set-off against another costs award. Even if an error in principle had occurred, the court would not have varied the sanction given the unchallenged findings that the contempt flagrantly violated the court’s process and that the contemnors repeatedly resisted or evaded compliance.
The court also declined to declare that the Charter breaches related solely to Tajbakhsh’s individual s. 7 rights. That relief sought to vary an order he had not appealed, was absent from his notice of appeal, and would serve no practical purpose because he had already received a remedy. The appeal was dismissed with all-inclusive costs of $40,000 to the respondents.
Key Takeaways
- Evidence exclusion can constitute a meaningful Charter remedy in civil contempt proceedings when it narrows the contempt findings and limits the resulting sanction.
- A court may refuse to set off another costs award against costs imposed as a contempt sanction where set-off would undermine the sanction’s purpose.
- A non-party to a motion may be denied the benefit of that motion’s costs award, particularly where remaining outside the motion could also have avoided exposure to an adverse award.
Why It Matters
The decision confirms the broad discretion Ontario courts possess when fashioning sanctions for civil contempt and the deferential appellate standard governing those decisions. A sanction will not be disturbed unless it is clearly unfit or rests on an error in principle.
It also illustrates that a Charter breach during contempt proceedings does not necessarily require a stay, a separate personal costs award, or a dollar-for-dollar reduction through set-off. Courts may instead provide an effective remedy by excluding tainted evidence and adjusting the sanction to ensure it does not compensate work connected to the unconstitutional conduct.