In Thrive Capital Management Ltd. v. Noble 1324, 2021 ONCA 722, the Ontario Court of Appeal reversed a Superior Court’s judgment against Noble 1324 Inc. for contempt of court for the failure to disclose their assets and account for money paid in respect of real estate investments. The Superior Court ordered two alleged fraudsters to repay at least $9 million to investors as a sentence for being found in contempt of court, notwithstanding that the trial on the merits had not been heard. In allowing the appeal, the Ontario Court of Appeal offered important guidance on strategic considerations and remedies when a party is dealing with a party who refuses to comply with court orders.


Thrive Capital Management advanced approximately $9 million to Noble 1324 for the purchase of real estate properties in Brampton and Richmond Hill. However, Noble 1324 allegedly misappropriated the funds. Thrive Capital Management quickly commenced an action and obtained a Mareva injunction, requiring Noble 1324 to produce an accounting, affidavits of assets, and contact information for the recipients of all funds and documents related to the projects. Noble 1324 failed to comply with the order and was found in contempt in June 2020, with the court noting that they “…blatantly ignored even the simplest of court orders…” and “… treated court orders as meaningless scraps of paper that could be used to tie the plaintiffs up in knots rather than as mandatory directives that form an essential part of basic social order.”

After making these findings, the Court asked the parties to make submissions on whether judgment was a possible sanction for contempt. Thrive Capital sought judgment in the form of a Rule 60.11 sanction for contempt. Noble 1324 was barred from making any submissions as to the merits of their defence. The Court accepted the plaintiff’s submission that Falcon Lumber Limited. v. 24803375 Ontario Inc., 2019 ONSC 4280, aff’d 2020 ONCA 310 (“Falcon) was an authority to support their claim for judgment. The Court was satisfied that the conduct warranted incarceration, but concluded that it was most appropriate to tailor the remedy by granting judgment.

The Court of Appeal addressed multiple issues on appeal, including:

1. A statement of defence can be struck for contempt of court

The Court of Appeal clarified that a statement of defence can be struck for contempt of court. Section 140(5) of the Courts of Justice Act gives the court express power to stay or dismiss a proceeding as an abuse of process. A court may also bar a defendant in contempt from filing a statement of defence. Rule 60.11 and 60.12 of the Rules of Civil Procedure allow a court to strike a statement of defence or bar a litigant from filing a defence.

The Court of Appeal addressed Falcon, which discussed the factors to be considered when determining whether to strike a party’s claim for failure to produce documents under Rule 30.08(2). The Court of Appeal explained that where the remedy for contempt sought is an order barring a party from defending or an order striking a pleading, some assessment of the merits may be necessary to determine whether such an order is a proportionate response to the contempt alleged. Where, for example, the contempt is less serious, is likely to be cured, and it appears that a party has a defence of substance, it would be disproportionate to bar the defendant from participating in the action.

2. Judgment is not directly available as a sanction for contempt

The Court of Appeal cautioned on combining the issues of contempt and a motion for judgment. The Court of Appeal acknowledged that where a statement of defence is struck, there may well follow an unopposed motion for default judgment. Rule 60.12 allows a court to make any order that is just for failure to comply with an order. However, the Court of Appeal explained that Rule 60.12 does not include final judgment in the action as a punishment for contempt in Ontario (unlike the Alberta Rules of Court).

The Court of Appeal went on to note that judgment may be an appropriate remedy against a party who is in contempt or who has failed to comply with an interim order. There is no impediment in the Rules barring a party from moving for various and alternative relief. For example, a litigant could move under Rule 60.11 for an order imprisoning a party for contempt, for an order striking their pleadings under either Rule 60.11 or 60.12, and for default judgment in the event the pleadings are struck. However, if a party moves for judgment, the moving party should expect that there will be a more “searching inquiry about the merits” and that the respondent will be given an opportunity to respond on the merits.

In the result, the judgment was set aside and remitted to another Superior Court judge to determine the appropriate sanction to be imposed on the appellants.

Key Takeaways
  • When seeking judgment against a party in contempt, the merits of the claim must be addressed.
  • Judgment is not a remedy directly available as punishment for contempt of a court order.
  • Parties may consider moving for alternative relief when confronting a party who refuses to comply with court orders.

* * The authors thank Eleanor Dennis, student-at-law, for her assistance in drafting this post.