Contempt Motions and Estate Litigation – Part V

November 3, 2006 Hull & Hull LLP Archived BLOG POSTS - Hull on Estates, Litigation Tags: , , , , , , 0 Comments

CONTEMPT MOTIONS AND ESTATE LITIGATION – PART V

As I mentioned in yesterday’s blog (November 2, 2006), today’s blog will note several cases wherein contempt motions were brought in respect of passings of accounts.

In Mesesnel (Attorney of) v. Kumer, [2004] O.J.N. 1834 (Ont. S.C.J.), the Court considered a contempt motion arising from allegations that the accounts prepared by a party did not cover the entire accounting period and the accounts prepared were improper.

In this case, prior to the death of Mesesnel, Donald Steward Mills had apparently been a good friend of Mesesnel and also served as Mesesnel’s solicitor and occasional business partner since 1970 and had Power of Attorney over Mesesnel since 1978. An Order was made for the passing of Mills’ accounts. Mills provided some accounting but it was claimed that the accounting was incomplete as it only went back to a certain date (1996) and that it was not submitted in proper court form. The clarity of the Order was a concern. It read:

“4. THIS COURT ORDERS that Donald Stewart Mills provide accounts as required under section 42 of the Act and prepare accounts relating to his management of assets of Mesesnel as required under rule 74, to be provided on or before June 30, 2002 unless otherwise ordered by this court.”

It was also alleged that Mills, as a solicitor, should have known how to submit the accounts, and that since Mills and Mesesnel were business partners and Mills had Power of Attorney since the 1970’s, Mills should have accounted for the period proceeding 1996. Mills’ position was, amongst other things, that it would be a “monumental job” to reconstruct most of Mesesnel’s business for the past 30 years.

The Court held that it would be foolish for Mills to be ordered to provide the proper passing of all accounts since 1978 simply because of the multiple roles Mills held in Mesesnel’s life. The Court wrote that Mills had “no duty, at law, to account to the Kumers for all the legal work he did for Mesesnel over the years…” and further that Mills did not wilfully or deliberately violate the original Order. Perhaps equally as important, the Court stated that the parties should have not relied on their own interpretation of the Order but sought clarification if they had questions.

In Krause v. Shkopich, [1998] S.J. No. 276 (Sask Q.B.), the Court, in dismissing a motion for a contempt, that claimed a party had not prepared a complete accounting in respect of the administration of trust property found that concerns surrounding the adequacy and completeness of the accounting were better addressed through the more usual course of requiring production and inspection of documents and proceeding to examination for discovery, if necessary.

In Belanger v. McGrade Estate, (2003), 65 O.R. (3d) 829 (Ont. S.C.J.), a sole estate trustee was found in contempt for a repeated failure to pass accounts and to comply with Court Orders. So grave was the non-compliance that the estate trustee was imprisoned. The estate trustee was released from jail, however, when, after hiring new counsel, it was learned that the estate trustee’s original lawyer was the actual cause of the repeated failure to pass accounts (the lawyer had not informed the estate trustee of the multiple Orders requiring the passing of accounts). In removing the contempt Order on the estate trustee, the Court relied on R. 60.11(8) which states, “on a motion, a judge may discharge, set aside, vary or give directions in respect of an order under subrule (5) or (6) and may grant such relief and make such other order as is just.”

In Steingarten v. Steingarten Estate, [1998 Carswell Ont. 5741] (O.C.J.) affirmed (June 22, 1999), Doc. C.A. C30263 (Ont. C.A.), the Court dealt with an application for contempt arising from an Order directing the respondent to provide the accounting required by an earlier Order of the Court. Since the original Order to pass accounts, the matter had been before the Court on a number of occasions. Despite the directions of the Court, the accounts still did not technically comply with the requirements of the initial Order. With the passage of time and the manner of record keeping, the trustee could not provide an appropriate accounting, despite efforts to do so even with the assistance of a chartered accountant.

The court dismissed the application for contempt noting that the matter had “developed into a ‘serious family squabble’ and the interest of justice would not be served by finding the trustee in contempt.” The judge added in his view, contempt had not been established. There was no order as to costs.

When a party defies an Order, an aggressive position by the enforcing party may be the only way to force the other party to comply with the Order. However, as noted in yesterday’s blog, and by certain of the above-noted cases, in deciding whether to bring a contempt motion, counsel should consider where bringing such a motion at a certain time best achieves the desired end.

Have a great day.

Craig.

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