Executive Summary: Key Legal and Evidentiary Issues

• PSP was found in civil contempt for repeatedly failing to comply with court orders enforcing audit cooperation.

• Despite multiple chances to purge its contempt, PSP continued to delay and obstruct the audit process.

• The audit uncovered significant financial discrepancies in settlement accounts totaling millions of dollars.

• PSP’s claim of making "best efforts" lacked credibility and was unsupported by admissible or persuasive evidence.

• The court appointed Ernst & Young as Investigative Receiver to complete the audit and enforce compliance.

• PSP was ordered to pay nearly $2 million into court for audit costs and an additional $500,000 in legal costs.

Background and contractual dispute
The dispute between Peoples Trust Company (PTC) and PSP Services Inc. (PSP) stems from an Acquiring Services and Sponsorship Agreement signed on August 28, 2019. The contract included a provision entitling PTC to conduct an audit at any time during the agreement, including the deconversion period following termination. PSP gave notice of termination in February 2024, triggering PTC’s audit rights. However, PSP refused to cooperate, arguing that the audit was no longer valid post-termination—a position inconsistent with the agreement's clear terms.

Initial court intervention and contempt finding
PTC sought an urgent motion to enforce its audit rights. Justice Myers issued a mandatory interlocutory order on May 6, 2024, compelling PSP to permit the audit. PSP initially resisted, and only conceded the day before the scheduled contempt hearing. Despite that concession, PSP failed to adequately cooperate with Ernst & Young (EY), the firm conducting the audit. Over a series of case conferences and further court orders, PSP’s non-compliance persisted. On January 2, 2025, Justice Chalmers found PSP in contempt of court.

Continued obstruction and evidentiary conflict
By the penalty phase hearing in March 2025, PSP still had not complied with several outstanding information requests from EY. EY identified significant unexplained variances in bank account balances—approximately $43 million CAD and $4.5 million USD. PTC argued that these discrepancies, and PSP’s continued obstruction, justified the imposition of penalties and the appointment of an investigative receiver.

PSP submitted affidavits suggesting it was making “best efforts” to comply, but the court found this evidence unpersuasive. Notably, one key affidavit was unsworn, and another declarant was not made available for cross-examination. The court preferred EY’s direct and unchallenged evidence of non-cooperation and audit obstruction.

Judicial findings and sanctions
The court emphasized that civil contempt undermines the rule of law and justified serious sanctions for repeated defiance. Justice Chalmers held that PSP’s failures were chronic, strategic, and financially motivated—especially as PSP had not made any payments toward identified debts. The court rejected arguments that the appointment of a receiver was premature.

Appointment of an investigative receiver
The court appointed Ernst & Young as the Investigative Receiver (IR), empowering it to complete the audit without interference from PSP. This remedy mirrored precedents in similar contempt cases where disclosure was evasive or incomplete. The court ordered that PSP bear the full costs of the IR due to its conduct.

Financial penalties and cost orders
PTC’s audit expenses up to March 2025 totaled nearly $2 million. The court ordered PSP to pay this amount into court and further required EY to separate costs attributable to PSP’s non-compliance. In addition, the court fixed legal costs for the contempt proceedings at $500,000, payable within 30 days. The judge described this as a proportionate and fair award, noting the volume and complexity of the motion materials and PSP’s aggressive and unreasonable litigation conduct.

Conclusion
The court’s decision reinforces the authority of court orders and the serious consequences of contempt. It highlights the use of investigative receivers as a tool to enforce transparency and compliance in complex commercial disputes. PSP’s continued defiance not only delayed a critical financial audit but also led to substantial legal and monetary penalties.