1258565 B.C. Ltd. v. Sidhu

2025 BCSC 513 1258565 B.C. Ltd. v. Sidhu

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: 1258565 B.C. Ltd. v. Sidhu, 2025 BCSC 513 Date: 20250116 Docket: S236871 Registry: Vancouver Between: 1258565 B.C. Ltd. Plaintiff And Jagsir Sidhu, 1069109 B.C. Ltd. and J.S. Print & Sign Shop Ltd. Defendants Before: The Honourable Mr. Justice Coval Oral Reasons for Judgment In Chambers Counsel for the Plaintiff: N.T. Mitha, K.C. I. Martinich Counsel for the Defendants, Jagsir Sidhu and 1069109 B.C. Ltd.: R.J. Morton Place and Date of Hearing: Vancouver, B.C. January 13, 2025 Place and Date of Judgment: Vancouver, B.C. January 16, 2025 [1] THE COURT: This is an application by the plaintiff for a finding of contempt against the defendant, Mr. Sidhu, relating to orders for an injunction restraining the breach of a restrictive covenant in an asset purchase agreement and an order for document production. [2] The application is somewhat unusual. Mr. Sidhu now acknowledges non-compliance with the court orders in question. His affidavit of August 8, 2024 admits this non-compliance and apologizes for it. [3] Further, the plaintiff and Mr. Sidhu have agreed to a payment from him of $75,000 to compensate the plaintiff for the non-compliance with the orders and the plaintiff's efforts to address the associated issues. The plaintiff seeks no further remedy for the alleged contempt. [4] Mr. Morton's position, on behalf of Mr. Sidhu, is that

although willful non-compliance with the terms of the orders are now admitted by Mr. Sidhu, a finding of contempt is unnecessary because of Mr. Sidhu's admissions, apologies, and agreement to pay the plaintiff $75,000 for the associated costs. I should add that Mr. Morton and his firm were not counsel when these breaches occurred. They have only come on the record since around July 2024, and have been endeavouring to assist Mr. Sidhu to rectify this bad situation. [5] Counsel for the plaintiff, Mr. Mitha, says that the finding of contempt is warranted. The record should be clear regarding Mr. Sidhu's willful disobedience of the orders as this may be relevant to the proceedings as they continue towards a September 2025 trial. Asset Purchase Agreement [6] In March 2023, the plaintiff and the defendants, 106 and Mr. Sidhu, entered into an asset purchase agreement ("APA") for the purchase and sale of 106's printing business in Abbotsford, known as Bourquin Printers and Signs. Mr. Sidhu was principal of 106 as well as a personal party to the APA. [7] The purchase price for the assets of the business was $2.1 million. The APA included extensive non-compete and non-solicitation obligations on Mr. Sidhu within a 50-kilometre radius of the business for five years. It also included extensive client lists as part of the good will being purchased. J.S. Print is Formed [8] The evidence

indicates that 106 has been inactive since the APA. It is now admitted by Mr. Sidhu that in July 2023, just a few months after the APA, he formed the defendant J.S. Print in order to operate a printing business, contrary to the restrictive covenants in the APA. Injunction [9] On October 6, 2023, the plaintiff filed its notice of civil claim. On October 11, it filed an injunction application to restrain the defendants from breaching the restrictive covenants in the APA. [10] On November 11, 2023, Mr. Sidhu filed a response, on behalf of himself and 106, denying any involvement with J.S. Print and denying J.S. Print had breached the restrictive covenants. [11] On December 1, 2023, the plaintiff obtained its injunction, by consent, restraining Mr. Sidhu and 106 from breaching the restrictive covenants. I am told by Mr. Mitha that Mr. Sidhu's consent to the injunction was based on his express position that he was not in breach of the restrictive covenants and so had no issues with consenting. [12] On February 12, 2024, the plaintiff obtained default judgment against J.S. Print because it had not filed a response. The company did not appear in this application, and the evidence suggests it has been inactive since May or June 2024. Document Production Order [13] This order, made by consent on February 13, 2024, required Mr. Sidhu to produce, by February 26, 2024, many categories of

documents listed in para. 37 of the plaintiff's written argument. Governing Law [14] There was no dispute about the legal principles applicable to this application as stated in the plaintiff's written argument as follows: 82. Contempt is a matter between a litigant and the court: "[r]efusal to obey court orders strikes at the heart of the rule of law, at the core of the organization of our society." (Glase v. Glase, 2009 BCCA 321 at paras. 7-8.) 83. A finding of contempt requires that three elements be established beyond a reasonable doubt: the order in question must state what is to be done or not done; the party subject to the order must have had actual knowledge of the order; and the party in breach must have done the act that the order prohibits. (Carey v. Laiken, 2015 SCC 17 at paras. 32-35.) See also Slater Vecchio LLP v. Arvanitis 2021 BCSC 428 at paras 2-5, 8, 15-19, 32, 33.

84. A finding of contempt does not require a finding that a party intended to breach the order--intention to do the acts that constitute the breach of the order is sufficient. (Slater Vecchio LLP at paras. 32-33.) Analysis Contempt of injunction order. [15] Mr. Sidhu admits to the breach of the injunction order in his affidavit of August 9, 2024 (see particularly paras. 6-10). [16] That is, he admits to operating J.S. Print from September 2023 to in or around mid-May 2024 in breach of the restrictive covenants in the APA and the terms of the injunction order. There is no question that all three elements of contempt have been proven beyond a reasonable doubt. [17] There are aspects of the breach that are worthy of note because they are egregious: a) In the response filed on behalf of himself and 106 in November 2023, he denied he was personally associated with J.S. Print or that J.S. Print was competing. These same denials had been sent by counsel on his behalf in August and September 2023 in correspondence with plaintiff's counsel; b) He initially put shares and the directorship of J.S. Print in his wife's name, then, in November 2023, he transferred these to a former employee, both as an attempt to end-run the restrictive covenants and the injunction. He admits now, however, that he was always the sole decisionmaker for the J.S. Print business; c) He consented to the

injunction on the basis that he was not competing, contrary to the restrictive covenants; d) Operating the competing business at the same time as he was employed by the plaintiff and using some of the plaintiff's other employees to assist him; e) In June 2024, he obtained an adjournment of this application on the basis that he had done nothing wrong and needed more time to respond; and f) The plaintiff was put to great efforts and expense to obtain evidence of the breaches of the restrictive covenants and the injunction that finally led to Mr. Sidhu's admissions. These efforts are described in detail in the plaintiff's written submissions. Contempt of document production order. [18] Mr. Sidhu also admits to breach of the document production order, that is, he admits to having had documents in his possession and control as of February 26, 2024, and forward, that should have been produced to the plaintiff under the February 13, 2024 consent order but deliberately were not. His initial lists on February 26, 2024, listed only a handful of documents. The plaintiff, through its own efforts, has obtained far more than 100 documents that should have been produced by Mr. Sidhu. [19] There is, again, no question that all three elements of contempt have been proven beyond a reasonable doubt regarding at least two categories of documents. First, are the documents on Mr. Sidhu's amended

list, August 8, 2024, documents 19.1 to 19.21. As I understood Mr. Morton, these were documents in Mr. Sidhu's possession as of the dates on the list that fell within the order and should have been produced earlier under that order. [20] Regarding the second category, the record is clear that at the time of the February 13, 2024 order and going forward, as Mr. Sidhu was conducting business on behalf of J.S. Print, he had possession and control of electronic records such as invoices from suppliers and invoices to customers, and payments and other written communications. All of these should have been produced at the time under the order. He did not do so. Now, on his evidence, he no longer has copies of or access to these documents or at least many of them. [21] As I have said, the only reasonable inference from this non-disclosure is that his non-compliance with the document order was deliberate. I did not understand Mr. Morton to argue otherwise. [22] The reason he does not have all of these documents now, on his evidence, is that he deleted his personal emails in December 2023 because of privacy concerns. I infer those concerns arose because of all the information the plaintiff was obtaining about Mr. Sidhu's breach of the restrictive covenants. [23] In April 2024, as he was winding down J.S. Print, he closed its online services for the business with its IT provider,

Clearbridge Solution Inc. That is where all the business and accounting records were stored. These records should have been produced under the order before the account was closed. Now that the account has been closed, Mr. Sidhu's evidence is he has had to pay Clearbridge around $1,500 in an ongoing effort to retrieve that data. [24] I agree with the plaintiff's submissions that, on the current evidence, it appears likely that Mr. Sidhu's actions regarding these documents will have led to material documents being lost. There is certainly a reasonable risk of that occurring. Conclusion [25] I find Mr. Sidhu in contempt for willfully disobeying the injunction and document production order. [26] I accept as a satisfactory remedy, from the perspective of the administration of justice, the $75,000 payment the parties have negotiated. [27] Although Mr. Sidhu has admitted his non-compliance, expressed his apology, and agreed to pay the $75,000, in my view the findings of contempt are warranted given the extent of his deliberate actions in breach of these two orders, as I have described above. "Coval J."