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Appeal court ruling important to law of civil contempt

The Ontario Court of Appeal’s move to restore a contempt finding against a Toronto lawyer is a significant decision when it comes to Mareva orders and the law of civil contempt, Toronto civil and commercial litigator Kevin D. Toyne tells Law Times.

“With respect to the law of civil contempt, I think the decision is quite important,” says Toyne, partner with Brauti Thorning Zibarras LLP, who represented the appellant, Judith Laiken in Sabourin and Sun Group of Companies v. Laiken.

According to the article, in 2006, Laiken obtained a Mareva order against financial adviser Peter Sabourin, who was represented by lawyer Peter Carey, preventing the sale, disposition, withdrawal, dissipation, assignment, dealing with, transfer, conveyance, conversion, encumbrance or diminishment of Sabourin’s assets, including money held in trust accounts.

“A few months later, Sabourin delivered Carey a $500,000 cheque with no instructions that he deposited into his trust account. Sabourin later called Carey and told him to use the funds to settle with another group of creditors. Carey refused, citing the Mareva order. Sabourin then told Carey to settle with Laiken, but the lawyer was unable to do so. He then asked Carey to return the funds, which he did after deducting $60,000 for legal fees,” says Law Times.

Laiken then brought the contempt motion against Carey, who, in response, argued that the Mareva order was unclear, suggesting that to retain the money would be to shelter it improperly from creditors, as solicitor-client privilege prevented him from revealing the funds, says the article.

Superior Court Justice Lois Roberts initially found Carey in contempt in October 2011 but set aside her order last year. Laiken brought the matter to the appeal court and, last week, was successful in her appeal of Justice Roberts’ findings, with the court ordering Carey to pay her costs in the contempt proceedings.

Law Times notes that appeal court Justice Robert Sharpe found the “procedure followed in the case was flawed” and that the court shouldn’t have allowed Carey to reopen the contempt finding.

In an interview with Lawyers Weekly, Toyne says the decision reminds lawyers that, “we too are subject to court orders and have to comply with them.”

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