While many people immediately think of criminal law when they hear the phrase “contempt of court,” there is another kind of contempt of court – civil contempt. Contempt proceedings in the civil realm are considered quasi-criminal. The criteria for finding contempt in a civil context differ depending on the kind of law engaged in the dispute (i.e., family litigation, commercial litigation, etc.). However, the standard of proof remains the same: such accusations must be proven beyond a reasonable doubt. The B.C. Supreme Court recently had to review and clarify the rules with respect to finding contempt in the context of a business dispute arising in commercial litigation.
Plaintiff Corporation Alleges Conspiracy to Wrongdoing
The case of Axion Ventures Inc. v Bonner is, at its core, a commercial litigation case. The plaintiff in the case, Axion Ventures Inc. (“Axion”), is a British Columbia company with the majority owner of several additional companies, each involved in the technology and video game space. In July of 2021, a whistleblower reported to Axion that its CEO, John Todd Bonner (“Bonner”), was engaging in wrongful conduct, leading Axion to terminate Bonner’s employment immediately. Axion simultaneously terminated the employment of Bonner’s spouse, Nithinan Boonyawattanapisut (“Jess”), who was at all relevant times a director of Axion and several other corporate entities, including the defendant HotPlay. As a further result of the whistleblower’s allegations, in 2021, Axion commenced a claim against Bonner, Jess, HotPlay, and a host of additional individuals and corporate entities, alleging that the parties had collectively engaged in corporate malfeasance in that the defendants had collectively conspired to steal valuable assets from Axion, including intellectual property and corporate opportunities. More specifically, Axion alleged that the defendants had engaged in two conspiracies: one conspiracy to steal intellectual property owned by Axion or its subsidiaries and to misdirect then or otherwise misuse investor funds and a second conspiracy to unlawfully transfer the assets illicitly obtained via the first conspiracy to a company called Monaker, in exchange for shares of Monaker at a preferred price. The defendants have collectively vehemently denied all allegations against them and claimed that no evidence exists to support the claims.
The Court Issues Orders, the Defendants Decline to Follow Them
The BC court has issued a series of orders throughout this complex matter, including a March 2022 court order demanding that Bonner and Jess, amongst others (collectively “the contemnors”), not hold themselves out, directly or indirectly, as directors of or persons otherwise in positions of authority with Axion or any of its affiliates. Despite this order, the defendant, Bonner, listed himself as the director of Axion Ventures in that company’s 2022 annual report. Jess listed herself as the CEO and chairperson of another of Axion’s affiliated companies. As a result, both Bonner and Jess were found, in March 2023, to be in contempt of the March 2022 order.
The defendants have collectively failed to accord to any of the orders issued by the court, repeatedly defying specific, clear directives from the court. Finally, in February of 2023, the court began to issue sanctions for the defendants’ clear contempt for all of the orders issued to that point, including an order issued in June 2023 that directed the contemnors to post security for good behaviour to the tune of $250,000, to compel their compliance with any future court orders. Despite these efforts, the contemnors had, by the time of this most recent contempt motion, neglected to comply with several court orders related to this matter.
The Plaintiffs, Once Again, Bring a Motion for Contempt
The court issued two orders – one in May of 2023, directing the contemnors to post a bond of nearly $3.5 US dollars and one in June of 2023 ordering payment of $250,000 as security for good behaviour – as sanctions, as a means of addressing the contemnors’ repeated failure to accord to the various court orders issued in this case. When the contemnors failed to comply with those sanctions, the plaintiffs were forced to bring yet another motion for a finding that the contemnors were, once again, in contempt of court.
The Elements of Contempt
The court noted that, with civil contempt, there are three elements required to be proven beyond a reasonable doubt:
- “that the order alleged to have been breached ‘must state clearly and unequivocally what should and should not be done’”;
- “that the party alleged to have breached the order must have had actual knowledge of it” and that
- “the party allegedly in breach must have intentionally done the act that the order prohibits or intentionally failed to do the act that the order compels”
Importantly, the court noted that there is no need to prove that a contemnor intended to ignore or otherwise disobey a court order; rather, knowledge of the order itself and failure to comply with same is all that must be proven beyond a reasonable doubt.
Application of the Test for Contempt to the Facts of This Case
In this case, the court acknowledged that the first two elements of the test for contempt were readily provable in that the court had issued the orders in question, which were explicit and unambiguous, against the parties alleged to have breached them. As such, only the third criterion was left to be proven – that the contemnors had intentionally repeatedly failed to obey the court’s sanctions.
The contemnors claimed that they had not intentionally failed to comply with the sanction orders but were simply unable to satisfy the court’s sanctions because they lacked the financial means to do so. As such, they claimed, they could not be found to have intentionally declined to comply when there was no means by which they could comply. The court roundly rejected this argument, noting that the appropriate time to raise the “impossibility to comply defence” is before the initial finding of contempt and issuance of sanction, when the court could have exercised its discretion not to issue sanctions in the first place. The contemnors had tried that argument before the court on both occasions that sanctions were issued, but the court had rejected their arguments then, as it did now. Moreover, the court concluded that “there is no onus on the plaintiffs to prove beyond a reasonable doubt that the Contemnors have the means to comply with the Sanction Orders.”
The Court, Once Again, Finds Contempt
In the result, the court was satisfied that all three of the criteria necessary for a finding of contempt had been established and further concluded that “the Contemnors have not established that it is impossible to comply with the Sanction Orders,” noting that the contemnors had not, according to the evidence, even attempted compliance with the sanction orders in question. As such, the court found that they “continue to demonstrate a consistent pattern of disrespect for orders of this Court,” and it declared that the Contemnors were in contempt of the sanction orders.
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