Civil contempt of court law is important to fraud victims seeking recovery. Their money is missing. A court orders the person who received their money to disclose where it went. The recipient refuses.  The victim brings a motion for a declaration of contempt of court. The purpose of a contempt motion is to coerce compliance and to punishment the suspected rogue for his or her non-compliance with Court orders.

In the case of Cerqueira et al. v. Whibley et al., 2024 ONSC 5936, a lawyer refused to disclose what she did with her client’s funds for a home purchase. The Court ordered the lawyer to disclose where the client’s funds went. The lawyer refused. The client brought a motion for contempt of court. Even when facing punishment, the lawyer refused to disclose where her client’s money went. The Court jailed the lawyer for 30 days, and stated:

[29]      The objectives of a civil contempt order are to enforce court orders, and/or to punish the wrongdoer to achieve both specific and general deterrence. Where efforts to compel the contemnor to comply with the orders have been unsuccessful, the matter may have gone beyond compliance and is now at the deterrence and denunciation stage…

[30]      The Ontario Court of Appeal has recently confirmed that punishment has been added as a secondary purpose of sentencing…

Given that the primary purpose of contempt of court law is to coerce compliance with court orders, fraud victims may be surprised to learn that a defendant’s right to silence trumps their right to know – even in a civil case.

On May 20, 2025, a Court in Ontario issued Reasons for Sentence on a civil contempt related to a Mareva injunction: Tabrizi et al. v. Farjami et al., 2025 ONSC 2973. For the reasons that follow, the Tabrizi case was of interest to us given an appeal decision we recently received in one of our contempt cases dealing with an Anton Piller Order: Sutherland Estate v. Murphy, 2025 ONCA 227.

The Anton Piller Contempt

The facts in the Sutherland case are not complicated. During the execution of an Anton Piller order (“APO”), a device was concealed by the defendant that was named for seizure in the APO. During the search, the device was located. When the device was being transferred from the search investigator to the Independent Supervising Solicitor (“ISS”), the defendant snatched the device and refused to surrender it despite numerous cautions about the consequences of contempt. The injunction orders were issued in support of fraud case.

The following day, we attended before the Court and served the defendant with a Notice of Motion that included a motion for a declaration of contempt for failure to surrender the device. The defendant attended Court with the device. In open Court the defendant surrendered the device to our data forensics expert. The Court ordered the defendant to attend for examination in aid of compliance of the APO and the Mareva injunction.

Thereafter the defendant and non-parties attended for examination. The data forensic expert’s analysis of the device revealed that it had been “reset”, which means that all data on the device had been deleted. At his examination, the defendant testified that before he “reset” the device, he had downloaded data to another device, reset (wiped) the device, and thereafter uploaded select data back onto the device. The defendant had counsel at this examination and had not moved to set aside the order to be examined.

The Plaintiffs continued their contempt motion. The Notice of Motion sought a declaration for contempt of the APO order terms to surrender the device and for deleting data from the device.

At the next motion the defendant consented to a declaration of contempt for failing to surrender the device and for deleting data from the device. The Court ordered the defendant to attend for further examination in aid of the Anton Piller order and Mareva injunction. The bottom line is that the examinations did not result in credible evidence as to where the data was downloaded before the device was “reset”.

The Court issued a sentence of five months imprisonment for contempt of the APO with a term that the defendant could apply for early release if he brought a motion to provide evidence as to what happened to the data that was deleted. A further term was that if he did not bring a motion for early release, that at the conclusion of the sentence he was required to come back before the Court to determine if a further sentencing order was appropriate.

The defendant appealed his sentence. He submitted that his rights pursuant to section 11(c) of the Canadian Charter of Rights and Freedoms were infringed as result of the motion judge compelling him to testify in aid of the APO after he was served with a Notice of Motion seeking a declaration that he was in contempt of the APO. The plaintiffs responded that s.11(c) of the Charter does not apply to examinations in aid of an injunction, and in any event, the defendant had a lawyer and never raised a Charter issue or challenged the order.

The Court of Appeal held that “it was for the Court to recognize the potential Charter issue and to consider whether evidence was compelled from the [defendant], and if so, for what purpose.” The Court of Appeal further held that requiring the defendant to testify at his own contempt proceedings did breach his rights pursuant to s.11(c) of the Charter.

The Court of Appeal went to state that an order requiring the defendant to disclose to where the data was downloaded was a form of “implied contempt” of “failure to produce the deleted data”.  The Court held that given there was no admission or trial on liability for “failing to produce the deleted data”, this “implied contempt” charge was “vacated”.

Quite obviously the person with direct knowledge of where data was downloaded to is the defendant. How can a plaintiff know who else, if anyone, was involved or has knowledge of this? This Court of Appeal decision limits a fraud victim’s options when seeking to recover data pursuant to an Anton Piller Order.

What is perplexing to fraud victims is that the practical impact of this decision is that if a contempt motion had not been brought, and examinations in aid of the injunction were conducted, then the evidence from those examinations could be used in the contempt proceedings. In other words, compelling evidence is permitted in one scenario and not in another, but for the same purpose. Victims may wonder why the Charter applies at all between private litigants, and why this snakes and ladders approach to civil litigation occurs.

The result of this Court of Appeal decision is that the coercive aspect of contempt proceedings is gutted if a victim seeks to compel a defendant to answer the basic questions: “Where did the money go?” or “Where did the data go?” If a victim seeks answers to these basic questions, the victim should just bring a motion for an order for examination – not a motion for contempt where the risk of punishment is a coercive factor.

To state otherwise, the timing of service of a Notice of Motion seeking a contempt declaration has become the critical factor. Multiple motions are now required to achieve information – adding to the cost and time required to unravel a fraud. If common sense examinations are requested, then this decision implies that the only purpose to contempt proceedings is punitive, not coercive. Punishment will not result in finding out where the money went or where the data went.

The further result of this decision is that even if a motion is not brought for a contempt declaration for “failing to produce the deleted data”, a Court may imply that such a motion was brought and later find that a sentencing term of early release for producing the deleted data is unlawful. “Implied” contempt findings result in the risk of a victim being ordered to pay a cost order for a motion for a contempt declaration that was not even brought. The Courts are a dangerous place for fraud victms.

The Mareva Injunction Contempt

The facts in Tabrizi et al. v. Farjami et al., 2025 ONSC 2973, are also not complicated. In this case, a Mareva injunction contained the usual terms that the defendant was required to produce an affidavit disclosing his worldwide assets. The plaintiffs were then permitted to examine the defendant on his sworn statement in aid of the Mareva injunction. The defendant failed to disclose certain assets (the “Spanish Property”) in his sworn statement and subsequent examination.

The Spanish Property was subsequently discovered by the plaintiffs, and they issued a Notice of Motion for a declaration of contempt of court. The defendant conceded the contempt, and the proceeding moved to the sentencing phase at a separate hearing. Like any victim, the plaintiffs wanted the Courts to issue orders to secure an asset they could ultimately recover against.

Typically sentencing for civil contempt takes place on a separate date from the declaration (liability phase) for contempt. The purpose of this separation is to give the defendant an opportunity to purge his contempt, as purging of contempt satisfies the coercive purpose of contempt motions. Purging of contempt also often mitigates against the punitive purpose of contempt proceedings.

As part of the Reasons for Sentence in the Mareva contempt proceedings, the Court stated:

[4]               The truth is important if one lives in civil society governed by the rule of law. Living on a desert island, one can utter as many lies and can breach as many oaths as one pleases, because no one can suffer harm. Canada is not such a place. This court relies on truth-telling but possesses only blunt tools for punishing the utterance of falsehoods.

[7]               The plaintiffs seek a custodial order of 90 days in jail, to be conditional on affording the defendants an opportunity to purge the contempt by requiring answers to certain undertakings given pursuant to the disclosure examinations [i.e.: “Where did the money go?”]

[10]           The defendants oppose the custodial penalty and say a fine …is more appropriate… They also claim to have attempted to purge the contempt by admitting the contempt. Pointing out that “a carceral sentence will only delay the action from progressing,” imprisonment would only put distance between the plaintiffs and financial recovery from the defendants.

The importance of the Tabrizi decision are contained in the following statements:

[14]           The plaintiffs’ proposal is an attempt to leverage the contempt and the carceral authority of the court for the purpose of unrelated strategic purposes in the litigation. I agree with the defendants that the plaintiffs’ reliance on transactions for which the court was unable to find the defendants in contempt amount to an overreach.

Because the Spanish property has been identified and documented, the plaintiffs understandably seek to leverage the contempt finding to expand their tracing of other assets in the hands of the defendants. However, the [contempt] sentencing hearing should not be used tactically as a means of obtaining unrelated procedural relief in the broader action.

The penalty must address the offence – not the underlying issues in the proceeding: 907037 Ontario Inc. et al. v. Plating Plus Ltd. et al., 2024 ONSC 4594, at para. 16. A custodial sentence of 90 days to be commuted once the defendants disclose information about the other transactions would amount to a misuse of the contempt power. The contempt power must be related to the offence and be enlisted to further the interest of the party for whose benefit the court made the order.

[17]           While the plaintiffs’ proposed sanction misses the target, an order relevant to the proceeding is more appropriate than a fine. The order needs to be more tailored to the objects of the disobeyed order. …

[18]          … To make the punishment fit the offence, the sanction here must address the contemnors’ attempt to put the Spanish property beyond the plaintiffs’ and the court’s reach.

[22]           Since the purpose of a Mareva injunction is to sequester property before judgment, their lies under oath were calculated to defeat or circumvent the court order. Their admissions of the contempt and later provision of the transactional documents must be considered in mitigation. However, they did these things only because they had been caught in the lie. If the penalty for active hiding of assets subject to a Mareva order is a fine …to each contemnor, it would not deter others from similar disobedience of court orders.

[23]           The appropriate sanction for the contempt must be directed at the objects of the provision of false testimony: if the object was to evade the Mareva, the obvious sanction is to restore the Mareva in some fashion in respect of the concealed property. This is not as easy as it sounds, because the property is situated in another sovereign country.

[24]           I observe that leave to obtain a writ of sequestration is also reserved under subrule 60.11(5) as a provision in the order penalizing a contemnor. The procedure is limited jurisdictionally to the authority of the sheriff in a county of Ontario. However, the principle that the court can sequester the personal and real property of a contemnor is consistent with an order requiring a contemnor to preserve an asset situated outside Ontario, if the court has jurisdiction over the person… This court can order the contemnors to do things, on pain of escalating penalties for further disobedience.

[25]           I therefore prohibit the defendants …from transferring, encumbering, or otherwise transacting with the Spanish property or causing others to do so, until further order of the court.

[26]           …Thus, until their personal liability is determined by the court, they shall derive no benefit from a property of which they disclaimed ownership. Lies have consequences.

[27]           …the defendants shall pay the plaintiffs their costs of the contempt motion, both for conviction and sentencing, on a full indemnity basis. [Emphases added]

Our commentary: civil contempt of court proceedings are risky for any fraud victim. The results are uncertain. They take time and are expensive. Even if a cost order is made, it is often not paid, often without a consequence as Courts prefer to try cases on the merits as opposed to striking defences for non-compliance with court orders.

Civil contempt proceedings were not always so complicated. In a civil contempt proceeding we conducted years ago – 2363523 Ontario Inc. v. Nowack, 2016 ONSC 2518 – the Court ordered a defendant to attend for examination after a Notice of Motion for contempt was issued. The Court ordered the defendant account for where the stolen money was transferred to. In other words, the Court permitted a one-step process instead of a multi-step process.

The Nowack contempt proceeding was based on a motion where judgment was issued, and the defendant had not complied with an order to account for where the money was transferred to. This was not a case of examination in aid of Mareva injunction or an Anton Piller order, but rather in aid of an execution on judgment.

In the Nowack case the defendant refused to account, and the Court relied on the examination in aid of judgment evidence to make a declaration of contempt. The Court ordered Nowack to attend for examination in aid of judgment again before the sentencing hearing for contempt. The Court relied on the second examination evidence in issuing a sentence of incarceration with a term for release if the accounting was made.

Nowack appealed. In a decision cited as 2363523 Ontario Inc. v. Nowack, 2016 ONCA 951, the Court of Appeal held that the process directed by the motions judge – which included the examinations during the contempt liability phase and during the contempt sentencing phase – did not offend section 7 of the Charter.

Quite obviously it was Nowack who knew what he did with the money. Non-compliance with the order to account resulted in incarceration of Nowack with an opportunity for early release, and if the accounting was not made, Nowack had to face a second contempt proceeding.  

The Nowack decisions seems like common sense to most fraud victims. But recently the Charter in civil contempt proceedings has become an obstacle and a risk that both fraud victims and lawyers must be aware of, as it significantly increases the costs to fraud victims. In the Sutherland case, the fraud victims were ordered to pay $15,000 costs to the defendant where the Court of Appeal imposed Charter obligations on a fraud victim and where, as the Court of Appeal states, a motions judge “failed to recognize” such Charter protections available to a civil justice defendant. A judge errors – a fraud victim pays.

Other cases worth reviewing on the application of the Charter to civil contempt proceedings involving a Mareva injunction include Sakab Saudi Holding Company v. Saad Khalid S Al Jabri, 2023 ONSC 2488. In the Sutherland case, the Court of Appeal referred to the Supreme Court of Canada decision on the application of the Charter to civil contempt proceedings cited as Vidéotron Ltée v. Industries Microlec Produits Électroniques Inc., 1992 CanLII 29 (SCC).

Inquiries: At Investigation Counsel, we only act for victims. We are Canada’s only boutique victim-focused fraud recovery firm. We investigate and litigate fraud recovery cases each and every day.

If you discover you are a victim of fraud, contact us to have your case assessed and a strategy for recovery mapped out before contacting police or alerting the rogue. The Courts grant tracing and freezing orders much more quickly through the civil process than the criminal process, and even if a criminal complaint is made, the police most often do not share their findings with victims.

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