Date: 19980909
Docket: T-359-98
BETWEEN:
WESTWOOD SHIPPING LINES INC.
Plaintiff
- and -
GEO INTERNATIONAL INC.,
GARRY HUNTLEY and COLIN FARNUM
Defendants
REASONS FOR ORDER
[Delivered from the Bench at Toronto, Ontario
on Wednesday, August 26, 1998 as edited]
ROTHSTEIN J.:
[1] The plaintiff moves for:
| (1) an order that the defendant, Colin Farnum, be apprehended and brought before the Court to be examined in his capacity as president of the defendant, Geo International Inc., as to Geo's ability to satisfy an order to pay into court the sum of U.S. $159,684.07; |
| (2) a writ of sequestration against the property of Colin Farnum; |
| (3) an order requiring Farnum to show cause why he should not be found guilty of contempt of Court. |
[2] The motion arises out of summary judgment proceedings in which the defendant Geo was found to have converted three containers of hiker shoes. The plaintiff, as carrier, was bailee of the Chinese vendor and was found, by order dated June 24, 1998, to be entitled to recover the goods or their equivalent value. Only .91% of the actual goods were recovered. The invoice price of the goods was U.S. $161,150.54. Pursuant to rule 2181 of the Federal Court Rules, 1998, by order dated July 14, 19982, Geo was ordered to pay into Court U.S. $159,684.07 (i.e. 99.09% of the invoice price) prior to 4:00 p.m. EDT July 15, 1998.
[3] Pursuant to rule 429(1)(b)3, because Geo did not obey the Court order to pay into Court by the date specified, the plaintiff moved for a writ of sequestration against the property of Colin Farnum, President of Geo. The motion was heard on August 6, 1998 by conference call. Counsel for Geo and Farnum persuaded the Court that it would be premature to issue a writ of sequestration against Farnum personally before steps were exhausted against the defendant Geo to satisfy the Court order requiring payment of money into Court. For the purposes of exhausting recourse against Geo, the Court ordered that Farnum, in his capacity as President of Geo, appear to be examined on August 12, 1998 at 2:00 p.m. in Toronto with respect to Geo's ability to satisfy the court order.
[4] Farnum advised the Court that he was unavailable on August 12, 1998 for personal reasons but that he would be available during the week of August 24, 1998. On the basis of his request and representation, the examination was adjourned to Tuesday, August 25, 1998 at 2:00 p.m. in Toronto.
[5] Counsel for all parties appeared before the Court on August 25, 1998 at 2:00 p.m. Farnum did not appear. Counsel for Farnum advised the Court that he had met with Farnum the previous day to prepare for the examination. On the morning of August 25, 1998, he received a letter from Farnum advising that he would not appear in Court as he had been ordered.
[6] After hearing the submissions of counsel, the Court adjourned the examination to Wednesday, August 26, 1998 at 10:00 a.m.. Counsel for Farnum was instructed to forward the adjournment order to Farnum by fax and by courier and to contact him by telephone, if possible, to advise him of the contents of the order.
[7] The proceedings resumed on August 26, 1998 at 10:00 a.m.. Farnum did not appear. Counsel for Farnum advised that he had spoken to Farnum and that, as a result, he believed Farnum was out of the country.
[8] It is as a result of these circumstances that the plaintiff now moves for a warrant to apprehend Farnum and to have him brought before the Court for examination in his capacity as President of Geo, for a writ of sequestration against his property and for a show cause order as to why he should not be found guilty of contempt of court.
[9] The basis for the application for a bench warrant is rule 464. On its face rule 46 gives the Court the authority to issue a warrant when a witness is required to attend at a hearing and fails to do so.
[10] Both the plaintiff and Farnum rely on Merchant Retail Services Limited. v. Stonestand, [1995] S.J. No. 288, a decision of Grotsky J. of the Saskatchewan Court of Queen's Bench. In that case, a Saskatchewan provision similar to rule 46 was invoked to require an individual who was ordered to attend at an examination in aid of execution and did not do so to be brought before the Court. While the Saskatchewan case is of some interest, I think the question of whether a bench warrant may issue in the circumstances here must be determined having regard to the Federal Court Rules, 1998.
[11] Rule 3 of the Federal Court Rules, 1998, provides,
| These Rules shall be interpreted and applied so as to secure the just, most expeditious and least expensive determination of every proceeding on its merits. |
It is having regard to rule 3 that I interpret and apply the rules which are relevant in this case.
[12] The rules pertaining to examinations in aid of execution are rules 87 to 100. These rules are under the heading "Examinations Out of Court" and indeed examinations in aid of execution are normally conducted out of court. However, here, the plaintiff and its counsel are in Vancouver; Geo, Farnum and their counsel are in Toronto. The examination was scheduled because Geo's counsel persuaded the Court that the assets of Geo should be resorted to before the property of Farnum. It would be inconvenient and expensive for the plaintiff to have to conduct an out of court examination in Toronto and then, if the examination demonstrated that Geo could not satisfy the court order for payment in to court, produce a transcript of the examination and proceed before the Court for a writ of sequestration at a later date. In order to move the matter forward expeditiously and with a minimum of cost, the examination was to be conducted before the Court in Toronto and if the Court was not satisfied upon hearing the examination that Geo could satisfy the court order, the Court would proceed immediately to the application for the writ of sequestration against Farnum's property.
[13] Counsel for Farnum argues that rules 975 and 986 apply to the circumstances here and that they provide a complete code which indicates what is to occur when a person fails to attend an oral examination. He points out that where a person fails to attend an examination pursuant to a Court order requiring his attendance, the recourse is contempt proceedings and for this reason, rule 46, and the power of the Court to require a witness to attend at a hearing, is not applicable.
[14] I have carefully considered Farnum's counsel's arguments but I do not accede to them. Rule 97 sets forth a series of remedies open to a party when a person fails to attend an oral examination out of court. One of those remedies is that the Court may order the person to attend. Rule 98 provides that if the person does not comply with the order to attend, he may be found in contempt and subject to the penalties authorized by rule 4727. Such penalties are punishment for contempt.
[15] Rule 46 is not a punishment provision. It is an enforcement provision which empowers the Court to enforce an order it makes requiring the attendance of a witness before the Court. Even though there is no express connection between rule 46 and rule 97, I see no reason why rule 46 may not be invoked when an order is made under rule 97 for a person to attend an oral examination at a hearing before the Court and he or she fails or refuses to do so. I do not say that rule 46 may be invoked if the order to attend is not at a hearing before the Court. I also acknowledge that examinations are not usually held before the Court. However, I see nothing that precludes examinations before the Court and I see no reason why rule 46 is not applicable to enforce an order made to compel a person's appearance where the examination is scheduled before the Court.
[16] Counsel for Farnum also argues that since Farnum is now apparently out of the country, that the Court should not make a "futile" order for attendance. There is no intention to try to enforce an order under rule 46 outside the jurisdiction of the Court. However, Farnum has a Canadian business and a place of residence at or near Toronto. His absence from Canada is not a reason for not issuing the warrant.
[17] Finally, counsel for Farnum argues that the Court should exercise its discretion against the issuance of an order under rule 46. However, the proceedings to date have been occasioned by reason of what I can only characterize at this point as the non-cooperation of Farnum and indeed his failure to abide by Court orders. It was counsel for Geo and Farnum who argued that the property of Geo be resorted to first and the examination of Farnum in his capacity as president of Geo was in aid of that objective. In such circumstances a judicial exercise of discretion would be to issue a warrant under rule 46.
[18] I turn to the writ of sequestration. Farnum's counsel makes a number of arguments relating to the proceedings that have already taken place in this Court. He questions the correctness of the decision originally given in favour of the plaintiff. He says that there is no actual judgment for monies to be paid to the plaintiff. He argues that before sequestration can take place, there are conditions precedent such as attachment and contempt proceedings that should be taken, apparently because sequestration is such an extraordinary remedy.
[19] Insofar as prior orders in this matter are concerned, it is not for the Court to explain or defend them. They are final and binding determinations unless and until they are overturned on appeal.
[20] Insofar as conditions precedent to sequestration are concerned, I can see nothing in the Federal Court Rules, 1998 that provides that either attachment or contempt proceedings must precede sequestration. Sequestration is a remedy provided for by rule 429. It sets forth a remedy that the Court may order when a person fails, to perform an act - payment into Court - within a specified time. That is the situation here.
[21] It was Farnum who persuaded the Court that sequestration against his property should not be ordered until the plaintiff had exhausted its recourse against Geo. As previously indicated, in aid of exhausting recourse against Geo, an order was made for Farnum to appear as President of Geo to be examined as to Geo's ability to satisfy the order made against it for payment of the money into Court. Farnum's non attendance frustrates this objective. He cannot be the beneficiary of his own failure to cooperate and disobedience of a court order. The plaintiff has satisfied me that sufficient steps have been taken to try to obtain compliance by Geo with a court order for payment of money into court, that this condition precedent has been met.
[22] Farnum's counsel makes a point of the fact that there has been no quantified judgment in favour of the plaintiff. The order against Geo required return of the hiker shoes or their equivalent value. Only 0.91% of the hiker shoes were returned. Prima facie, it is the balance of the invoice price that would be owing to Geo. However, Geo has made a submission that the goods were not of merchantable quality and only $40,000.00 Cdn. was received when they were sold. There is no evidence that Geo has taken any steps to try to resolve the actual value of the hiker shoes and the amount it owes, either with the plaintiff or the Chinese vendor. Irrespective of Geo's conduct, the exact quantification of the value of the hiker shoes is a matter for trial and that will be conducted as a specially-managed proceeding as soon as possible.
[23] In the meantime, there is no doubt that Geo is indebted to the plaintiff for some amount for the hiker shoes-apparently, something between $40,000.00 Cdn. and $159,684.07 U.S. Farnum's counsel says that Geo has incurred expenses with regard to the hiker shoes but there is no pleading or any document to properly place this position before the Court.
[24] An amount is owing to the plaintiff and Geo, through Farnum's failure to attend to be examined, has frustrated any attempt to ascertain Geo's ability to pay into court the amount ordered pursuant to rule 218. And since Geo has taken no steps itself to try to resolve the precise amount owing, I am satisfied that all conditions precedent to the issue of a writ of sequestration against Farnum personally have been met. A writ of sequestration under rule 429 is based on Geo's failure to comply with a court order within the time specified therein. I see no reason why it should not be invoked in this case and at this time.
[25] With respect to contempt, Farnum's counsel does not seriously argue against proceedings being commenced.
[26] For all of these reasons the plaintiff's motion for a warrant under rule 46, the issuance of a writ of sequestration against Farnum's property and the initiation of contempt proceedings against Farnum are granted.
[27] Plaintiff's counsel shall prepare an order giving effect to these reasons and obtain agreement as to form and content from opposing counsel, failing which he shall arrange a conference call with the Court to resolve the wording of the order as soon as possible. Plaintiff's counsel shall also arrange a conference call with the Court for the purpose of expediting a trial for the purpose of quantifying the value of the hiker shoes and the exact amount owing to the plaintiff.
"Marshall Rothstein"
Judge
Ottawa, Ontario
September 9, 1998
FEDERAL COURT OF CANADA
Names of Counsel and Solicitors of Record
COURT NO: T-359-98
| STYLE OF CAUSE: WESTWOOD SHIPPING LINES INC. |
- and -
| GEO INTERNATIONAL INC., GARRY HUNTLEY and |
| COLIN FARNUM |
DATE OF HEARING: TUESDAY, AUGUST 25, 1998 and
| WEDNESDAY, AUGUST 26, 1998 |
PLACE OF HEARING: TORONTO, ONTARIO
REASONS FOR ORDER BY: ROTHSTEIN, J.
DATED: TUESDAY, SEPTEMBER 1, 1998
APPEARANCES: Mr. David McEwan
For the Plaintiff
Mr. Peter Auvinen
| For the Defendants Geo International Inc. and Garry Huntley |
| Mr. P.F. Schindler |
| For the Defendant Mr. Colin Farnum |
SOLICITORS OF RECORD:
McEwan, Schmitt & Co.
Barristers & Solicitors
Suite 1615
1055 West Georgia St.
Vancouver, B.C.
V6E 3R5
| For the Plaintiff |
P. F. Schindler
Barrister & Solicitor
Box 22
2112-401 Bay Street
Toronto, Ontario
M5H 2Y4
| For the Defendant Colin Farnum |
Miller, Thomson
Barristers & Solicitors
Box 27
20 Queen St. West
Suite 2500
Toronto, Ontario
M5H 3S1
| For the Defendants Geo International Inc. and Garry Huntley |
FEDERAL COURT OF CANADA
Date: 19980901
Docket: T-359-98
Between:
| WESTWOOD SHIPPING LINES INC. |
Plaintiff
- and -
| GEO INTERNATIONAL INC., |
| GARRY HUNTLEY and |
| COLIN FARNUM |
Defendants
REASONS FOR ORDER
__________________
1 218. When a summary judgment is refused or is granted only in part, the Court may make an order specifying which material facts are not in dispute and defining the issues to be tried, including an order (a) for payment into court of all or part of the claim; (b) for security for costs; or (c) limiting the nature and scope of the examination for discovery to matters not covered by the affidavits filed on the motion for summary judgment or by any cross-examination on them and providing for their use at trial in the same manner as an examination for discovery.
2 The July 14 order amended the order dated June 24, 1998.
3 429. (1) Where a person who is required by an order to perform an act within a specified time refuses or neglects to do so within that time, or where a person disobeys an order to abstain from doing an act, the order may, with the leave of the Court, be enforced by . . . (b) where the person is a corporation, a writ of sequestration against the property of any director or officer of the corporation; ...
4 46. Where a witness who is required to attend at a hearing fails to do so, on motion, the Court may, by a warrant in Form 46, order that the witness be apprehended anywhere in Canada, brought before the Court and (a) detained in custody until the witness's presence is no longer required; or (b) released on a recognizance, with or without sureties, on condition that the witness attend to give evidence.
5 97. Where a person fails to attend an oral examination or refuses to take an oath, answer a proper question, produce a document or other material required to be produced or comply with an order made under rule 96, the Court may (a) order the person to attend or re-attend, as the case may be, at his or her own expense; (b) order the person to answer a question that was improperly objected to and any proper question arising from the answer; (c) strike all or part of the person's evidence, including an affidavit made by the person; (d) dismiss the proceeding or give judgment by default, as the case may be; or (e) order the person or the party on whose behalf the person is being examined to pay the costs of the examination.
6 98. A person who does not comply with an order made under rule 96 or 97 may be found in contempt.
7 472. Where a person is found to be in contempt, a judge may order that (a) the person be imprisoned for a period of less than five years or until the person complies with the order; (b) the person be imprisoned for a period of less than five years if the person fails to comply with the order; (c) the person pay a fine; (d) the person do or refrain from doing any act; (e) in respect of a person referred to in rule 429, the person's property be sequestered; and (f) the person pay costs.