As the Court’s decision in 336239 Alberta Ltd. (Dave Diesel’s Repair) v. Mella, 2016 ABQB 174 demonstrates, there can be serious consequences for debtors who fail to comply with Court Orders.
In 2014, MLT, on behalf of 336239 Alberta Ltd. commenced an action against its bookkeeper, Francis Mella, for the fraudulent misappropriation of over approximately $2.2 million and obtained an attachment Order against Francis Mella which prohibited him from exceeding $2,000 per month in monthly household expenditures and directed him to provide monthly statements outlining his expenditures to the Plaintiff. Francis Mella proceeded to repeatedly exceed his monthly expenditures and refused to provide statements verifying his expenses. The Court declared Francis Mella to be in contempt of the Attachment Order. To purge the contempt, Francis Mella was ordered to repay the money that exceeded the monthly expenditure limit, failing which he was ordered to pay a fine of $1,000.00 as well as an additional daily fine of $200.00 for each day he remained in contempt. Francis Mella failed to do so.
Francis Mella also continued to evade judgment enforcement proceedings by fraudulently conveying funds to his wife, directing rent payments that were owed to him to be paid to his wife, and telling clients of his business to not pay funds in response to garnishee summons issued by the Plaintiff. The matter was returned to Court and the Court found that Francis Mella failed to purge his contempt under the first contempt order and continued to owe fines in the cumulative amount of $56,000.00 (336239 Alberta Ltd. (Dave Diesel’s Repair) v. Mella, 2016 ABQB 174). Francis Mella was then required to purge his contempt by paying the fines as well as the amount he overspent under the Attachment Order, otherwise he would be required to attend Court to show cause for why he should not be imprisoned. Francis Mella was found to have failed to purge his contempt and was sentenced to imprisonment for three months.
Francis Mella appealed the second contempt order and also applied for a stay of it. The appeal court (336239 Alberta Ltd.(Dave Diesel’s Repair) v. Mella), 2016 ABCA 226) refused to grant a stay of the Contempt Order, finding that Francis Mella’s misconduct of continuing to flagrantly breach Court Orders as the reason for the contempt sanctions being imposed. Francis Mella’s imprisonment was found to be both a punishment (for failing to obey the Court’s Orders) and an incentive to induce compliance. The Court found that as Francis Mella had been contemptuous of the Court Orders he ought to bear a substantial portion of the costs directly relating to the contempt, as it will “bring home the seriousness of their action and their responsibility for the consequences of their contempt.”