Our previous blog post on The Case of Francis Mella addressed the serious consequences for debtors that can result from their failure to comply with court orders. Dave’s Diesel had obtained a judgment for $2.2 million dollars against Francis Mella for fraudulent misappropriation of funds while he was employed as a book keeper. Francis Mella then failed to comply with Court Orders and transferred his assets/payables to his wife in order to avoid collection proceedings. As a result, he was imprisoned for 3 months for contempt of Court, commencing June 24, 2016. He then filed an appeal and applied for a stay of proceedings which was denied. Francis Mella subsequently abandoned his appeal. This meant that the outstanding finding of contempt was in force and unassailable.
MLT filed a third application for contempt of court, on behalf of the Dave’s Diesel Repair, in relation to Francis Mella’s conduct that occurred after the date of the initial contempt hearing but before his imprisonment. In this third application, the evidence before the Court established that Francis Mella had testified under oath that he was not working or earning any money, when evidence to the contrary showed that he was in fact working and receiving income. He was also found to have sent emails to past clients, telling them that he had created a new business name, Essential Small Business, and that they were to render payment to this new firm (rather than to him, the judgment debtor). The Court was not impressed with Francis Mella’s obvious deceit and found him in further contempt of court for acting with the express intent to defraud, delay, and hinder the Dave’s Diesel’s efforts in enforcing its judgment. On August 23,2016 , Francis Mella was sentenced to a further 12 months of imprisonment as a result of his ongoing and further contempt.
The decision to hold Francis Mella in continued and further contempt illustrates that even if individuals are imprisoned, the sentence itself does not act to purge the contempt. Rather, imprisonment serves the dual purpose of punishment and forcing compliance. If compliance is not forthcoming then imprisonment should continue. The consequences are more serious when the debtor continues to engage in conduct that is clearly designed to thwart a judgment creditor’s rights, when the debtor is already involved in contempt proceedings. It will be interesting to see what the Court will do if he continues to be in contempt at the conclusion of his 12 month sentence. Ongoing imprisonment is a very real possibility.