Ontario Court of Appeal Reviews Civil Contempt in Estate Litigation and Confirms Fines Not Payable to the Estate 

 

Susin v. Susin - http://canlii.ca/t/gf3fq

 

In October, the Ontario Court of Appeal released a decision that examines the test for civil contempt of court in the context of an estate dispute and confirmed that the proper recipient of any fine imposed is the Provincial Treasurer and not the estate itself.[1]

 

The Dispute

 

This dispute is between two factions of nine siblings and has been ongoing since 1998. The siblings' father died in 1983. His Will allowed his wife to remain in the family home [the Estate's main asset] in Niagara Falls until she died, and then the house was to be sold and the proceeds to be divided among the children. The mother died in 1998 and lengthy and voluminous litigation commenced, including litigation over one son's (John Jr.'s) equitable interest in the home, two Federal Court hearings on mouldy papers John Jr. allegedly left in the house, a motion for relief on an improvident sale, a contempt motion against the lawyer for the Estate (which was dismissed), and appeals of all of these decisions. 
 

John Jr. was declared a vexatious litigant in 2008.

 

John Jr. and his brother Dorino (on behalf of their group of siblings) had also brought multiple motions to have the passing of account application venue moved from Welland. However, seven Superior Court Justices (in motions brought in Toronto, Newmarket and Brampton) ruled that Welland was the correct place for a passing of accounts hearing.[2]

 

In 2013, Dorino (on behalf of John Jr. and their faction) brought yet another motion to have the passing of accounts application moved. The responding set of siblings (including the Trustees) brought a cross motion to commit Dorino for contempt of court, an order declaring him a vexatious litigant, and an order that he could not start any proceedings against the Trustees without leave of the Court.

 

The Motion 

 

The motion judge dismissed Dorino's motion seeking to move the venue of the passing of accounts application.

 

The motion judge also dismissed the cross-motion seeking to make Dorino a vexatious litigant. However, Dorino was found to be in contempt of court:

 

The trustees submit that . . .[Dorino is] in contempt of court by bringing the present motion in the context of this litigation. Three[3] times the court has pronounced that the matter must proceed in Welland. On the last occasion a clear warning was given that misbehaving beneficiaries could face imprisonment if they continue their campaign or abusive motions. In the face of that warning, the present motion, a fourth request to transfer the matter out of Welland, was brought. In my view in the particular circumstances of this case this serious and repeated abuse of process rises to the level of contempt. It subverts the administration of justice by making ineffective the rules of procedure and basic concepts of fairness such as res judicata.

 

I have no doubt on the criminal standard of proof that Dorino Susin brought the present motion intending to subvert the administration of justice to show disrespect for the court and to harass the responding parties. Dorino Susin's motives are purely vindictive. He has no hope of recovering from the estate. He owes the estate much more than his share of what remains. I find him guilty of contempt. [4]

  

As a penalty for contempt, the motion judge ordered that Dorino:

 

b) pay a fine to the Estate in the amount of $10,000.00;

 

c) be prohibited from taking any further steps in this proceeding or in any proceedings  to which the Trustees are parties, except for an appeal from the present order; and

 

d) pay costs of the motions to the Estate in the amount of $10,141.78 on a full indemnity basis.

 

Dorino served the three days in jail and then appealed the $10,000 fine payable to the Estate and appealed the judge's decision to dismiss his motion to move the passing of accounts hearing.

 

The Court of Appeal

 

Passing of Accounts Venue

 

Justice Blair, on behalf of the Court of Appeal, found no basis to interfere with the trial judge's decision to dismiss the motion to change the venue for the passing of accounts application. The motion judge had two reasonable bases for doing so:  First, the trustees could not pass the final stage because there were still significant debts owing to the estate (including substantial outstanding costs awards against Dorino and John Jr.) and the estate continued to incur legal costs as the John Jr./Dorino team kept bringing further motions before the court. Second, the issue of venue, including the venue of the passing of accounts had already been litigated repeatedly, and repeatedly Superior Court judges had held that venue for dealing with matters relating to the estate was Welland. [5]

 

Contempt

 

The Court of Appeal also found no reason to interfere with the motion judge's finding of contempt. The test for civil contempt, where breach of a court order is in issue, is three-fold:

 

a) the order that is said to have been breached must be clear and unequivocal;

 

b) the party who is alleged to have breached the order must be found to have done so deliberately and wilfully; and

 

c) the evidence must prove contempt beyond a reasonable doubt. [6]

 

Dorino argued that the bringing of the present motion (to move the venue of the passing of accounts hearing) did not constitute disobedience of the previous orders and therefore that the motion judge had no authority to make a contempt order. Rule 60.11 of the Rules of Civil Procedure states that: "A contempt order to enforce an order requiring a person to do an act, other than the payment of money, or to abstain from doing an act, may be obtained only on motion to a judge in the proceeding in which the order to be enforced was made."[7] Dorino argued that the previous orders did not require him to do an act or abstain from doing an act and therefore a contempt order could not be made to enforce the orders under the Rules.

 

Justice Blair stated that:

 

While this may technically be so at one level, I see no practical difference between failing to obey the orders and failing to recognize and accept the validly-made previous orders, in these circumstances. They are tantamount to the same thing. Substantively they have the same destructive effect on the integrity of the administration of justice.  In any event, breach of a prior court order is not the only type of conduct that will justify a finding of contempt.

 

Referring to the classic definition of contempt at common law in The Queen v. Gray [8]  which includes "any act done or writing published calculated to obstruct or interfere with the due course of justice or the lawful process of the Courts is a contempt of Court", Justice Blair concluded that bringing the new motion constituted contempt of court:

 

It constituted an act done that was intended to, or was likely to, interfere with or obstruct the fair administration of justice. . .  Here, even if Dorino's conduct did not amount to breach of a court order, it was open to the motion judge - as he recognized - to resort to the common law power to commit for contempt in the circumstances. 

 

Looked at in isolation, Dorino's motion for the passing of accounts in Brampton could be taken as simply an abuse of process. But in the circumstances here, it is more than that. The facts outlined by the motion judge in the passages quoted above raise Dorino's motion to another level, in my view. As the motion judge found, Dorino brought the motion intending to subvert the administration of justice, intending to show disrespect for the court, and intending to harass the opposing beneficiaries, all for vindictive reasons and in the context of having been previously warned of the risk of imprisonment for contempt.[9]

 

Error in Ordering Fine Payable to Estate

 

While the Court of Appeal agreed that Dorino was in contempt, it found that the trial judge erred in finding that the fine should be payable to the Estate.

 

Citing SNC-Lavalin Profac Inc. v. Sankar,[10] the Court found that a fine imposed for civil contempt of court ought not be payable to a party in the action but, rather, to the Provincial Treasurer:

 

Contempt of court for breach of a court order is an offence against the authority of the court and the administration of justice. . . 'It does not have, and must not appear to have, the function of a civil action in tort or for breach of contract". . . A fine for contempt of court, therefore, should not go to the plaintiff in the lawsuit. [11]

 

Justice Blair "did not see any difference" between 'a plaintiff' and the Estate: "both are parties to the proceedings".[12] Ultimately, the Court decided to set aside the $10,000 fine in its entirety. The Estate Trustees had asked that if the fine was not going to be paid to the Estate, then no fine should be imposed, as a payment to the Provincial Treasurer would have the effect of further diminishing Dorino's assets and making it more unlikely that he would pay any outstanding costs awards owing to the Estate.

 

Conclusion 

 

Civil contempt orders are difficult to obtain, yet are now more frequently issuing in Estates and in particular in fiduciary accounting proceedings. Even when they are ordered it is hard to determine if they fulfill their goal of deterring contemptuous behaviour.

 

In this matter, any financial penalty was virtually useless due to the extensive debt the party owed the Estate.  However, this case provides a helpful overview of the test to meet both under the Rules and at common law for civil contempt of court.