Executive Summary: Key Legal and Evidentiary Issues

• This case concerns a business venture dispute that generated hundreds of unanswered undertakings over more than a decade of litigation.
   
• Sanctions for civil contempt required balancing coercive and punitive purposes against the seriousness of production-order breaches.
   
• Appellate review narrowed the original 32 contempt findings to 18 undertakings after ten findings failed to meet the test for contempt.
   
• Proportionality, aggravating and mitigating factors, and the "step principle" guided the court's selection of an appropriate sanction.
   
• Striking the defendant's pleadings was rejected as too extreme despite the prejudice caused by missing documentary evidence.
   
• Ultimately, a monetary fine combined with a costs award was imposed as the fit and proportionate remedy.
   

Facts of the case

Neville Reddy and Parminder Saroya entered a business venture in 2012 to develop real estate projects in Alberta and the United States. The parties never documented the terms of their arrangement, and disputes arose over their respective responsibilities and remuneration. Reddy alleges he transferred substantial funds to Saroya for investment in properties, with Saroya expected to contribute an equal amount and to select and purchase the properties. Saroya was questioned on six occasions between 2013 and 2016, giving a total of 482 undertakings. Several court orders compelled him to respond to outstanding undertakings, including a Consent Order of November 8, 2013, a Case Management Order of June 28, 2016, an Order of April 16, 2018, and an Order of January 11, 2022. Three contempt applications followed over the years, culminating in a Third Contempt Application after a Consent Order of March 14, 2023 directed Reddy to file it. In Reddy v Saroya, 2024 ABKB 478, the court reviewed 35 undertakings alleged to be deficient and found 32 of them inadequately answered. Following an appeal reported as Reddy v Saroya, 2025 ABCA 322, the Court of Appeal reversed ten of those contempt findings, leaving 18 undertakings for which Reddy v Saroya, 2026 ABKB 457 determined the appropriate sanction. In the 2026 decision, the court also declined to consider a document titled an "Expert Witness Affidavit," submitted by Saroya's counsel in November 2025, purporting to summarize an independent financial assessment prepared by Sarah Hawco.

Policy and legislative provisions at issue

The Alberta Rules of Court, Alta Reg 124/2010, govern civil contempt. Rule 10.51 addresses orders to appear, Rule 10.52 addresses declarations of civil contempt, and Rule 10.53 sets out the available penalties, including imprisonment, fines, and orders striking pleadings, staying proceedings, or excluding evidence. Rule 10.53(2) permits a costs award against a person declared in contempt. The elements of civil contempt applied throughout both decisions were: an existing requirement of the court; notice of that requirement to the alleged contemnor; and an intentional or reckless breach without adequate excuse, each of which must be proven beyond a reasonable doubt. Rules 6.45 and 6.46, concerning referee reports, were also engaged earlier in the litigation history.

Reasoning and analysis

The court explained that civil contempt sanctions are primarily coercive rather than punitive, with punishment and deterrence serving secondary purposes. In the 2024 decision, the court reviewed each of the 35 disputed undertakings individually, assessing whether Saroya's efforts to locate and provide records — often made five to nine years after the undertakings were given — satisfied his obligations. The court repeatedly found such delays unacceptable, noting that records had frequently since been destroyed and at least one relevant witness had died. Saroya's answers were found adequate for only three of the 35 undertakings, while the remaining 32 were found inadequate, evasive, or nonresponsive. On appeal, the Court of Appeal determined that ten of these findings did not meet the legal test for contempt and set them aside, leaving 18 undertakings on which sanction needed to be determined in the 2026 decision. In selecting the sanction, the court considered incarceration but found it inappropriate absent conduct directed at the court itself or broader public harm. It also considered striking Saroya's Statement of Defence, the remedy sought by Reddy, but found this too extreme because it would deny Saroya the ability to present a defence at trial, despite acknowledging the prejudice caused by the missing documents. The court instead found a fine appropriate to recognize the importance of complying with production orders, together with a costs award reflecting both a sanction and compensation for Reddy's efforts to enforce compliance. The court further cautioned that the contempt remedy should not be used routinely to resolve disputes over the sufficiency of undertaking answers, and noted that the trial judge retains discretion to draw an adverse inference regarding the missing information.

Ruling and overall outcome

Reddy was the successful party. The court found Saroya in civil contempt with respect to the 18 remaining undertakings and ordered him to pay a fine of $8,000 to the Clerk of the Court, together with solicitor-client costs of $69,977.00 for the third contempt application and costs of $5,400 and $10,800 under Schedule C, Column 5 for the first two contempt applications, plus taxable disbursements and GST on the total amount. Because the disbursements and GST components were not quantified in the decision, the complete aggregate monetary award cannot be determined from the document; the specifically stated figures total $94,177.00, exclusive of those additional unquantified amounts.