Executive Summary: Key Legal and Evidentiary Issues

• The appellant was found in civil contempt for repeatedly breaching court orders related to a contractual audit.

• Multiple court orders compelling cooperation with the audit were ignored, leading to a penalty order including a payment of nearly $2 million into court.

• The appellant appealed only the financial sanctions, not the underlying contempt finding or the appointment of a receiver.

• An automatic stay of the payment order was triggered by the appeal under Rule 63.01 of the Rules of Civil Procedure.

• The court lifted the stay, finding the appeal weak and the payment into court non-prejudicial since it simply preserves funds.

• The moving party was awarded partial costs, reinforcing judicial intolerance for ongoing non-compliance with court authority.

Background and procedural history

Peoples Trust Company (PTC), a payment card service provider, entered into a seven-year commercial agreement with PSP Services Inc. (PSP), an independent sales organization. As part of the agreement, PTC was entitled to perform on-site audits to ensure compliance. In early 2024, after raising concerns about chargebacks, PTC attempted to conduct an audit. PSP claimed that because it had terminated the agreement, PTC no longer had audit rights, and it refused access.

The matter escalated, and in May 2024, PTC obtained a court order compelling PSP to cooperate with the audit. PSP failed to comply, and subsequent orders were also ignored. Despite agreeing at the eleventh hour to permit the audit, PSP continued to obstruct the process. Ultimately, PTC brought a motion for civil contempt.

Contempt and penalty order

Justice Chalmers of the Superior Court found PSP in contempt of four separate court orders. The judge concluded that PSP had intentionally breached those orders, repeatedly thwarted the audit, and failed to demonstrate any remorse or corrective action. During the penalty phase, the court emphasized the need for deterrence and accountability in light of PSP’s prolonged non-compliance. As a result, the court ordered PSP to:

• Pay $1,998,612.07 into court, reflecting unpaid audit costs;

• Pay $500,000 in costs;

• Submit to the appointment of an investigative receiver to complete the audit.

Appeal and motion to lift the stay

PSP appealed only the financial aspects of the penalty order. By operation of Rule 63.01, the appeal triggered an automatic stay of the monetary components. PTC responded by bringing a motion to lift the stay, seeking immediate payment of the $1.99 million into court. It argued that allowing the stay to continue would undermine enforcement and that the appeal had little merit.

Justice Madsen of the Ontario Court of Appeal considered the test for lifting an automatic stay. This involved examining the risk of hardship to the moving party, the respondent’s ability to repay the funds, and the merits of the appeal. The judge found that all three factors favored PTC.

PTC faced uncertainty and potential hardship in recovering the funds if the stay remained. Since the payment was into court—not directly to PTC—there was no prejudice to PSP if the appeal later succeeded. The court also found that PSP’s appeal had weak prospects, given the discretionary nature of contempt penalties and the absence of any alleged legal error.

Decision and outcome

The Court of Appeal granted the motion, lifting the stay on the payment order and requiring PSP to pay $1,998,612.07 into court by August 15, 2025. While PTC had requested over $25,000 in costs for the motion, the court awarded a more modest $7,500, payable immediately.

This ruling underscores the court’s firm stance on enforcing compliance with its orders, particularly where a party has shown prolonged and deliberate disregard. It also illustrates how courts may intervene during appeals to preserve the integrity and enforceability of contempt-related sanctions.