A Lesson on Contempt
Being a trustee is serious business. A trustee, by law, owes a fiduciary duty to the beneficiaries for whom he or she holds property and must keep this in mind and act in the best interest of those beneficiaries at all times.
The Court does not take the breach of fiduciary duties lightly and will Order trustees to fulfil their obligations. If a trustee doesn’t heed such Orders, they may find themselves in contempt of court, as was the case in a recent Ontario Superior Court of Justice decision, Re Penna Estate.
In Re Penna Estate, the defendant was found in breach of the following four Court Orders during the course of litigation that had been ongoing for five years:
1. A Mareva Injunction.
2. A Passing of Accounts Order.
3. An Order to provide the Court with an up-dated Affidavit respecting the values of assets listed in the Mareva Injunction.
4. An Order of to attend at an Examination in-aid-of execution and to bring all documentation. The Defendant was also ordered to provide an Affidavit respecting the status of his assets, which were frozen under the Mareva Injunction, since it was discovered that he had liquidated all such assets.
Justice Greer found that the Defendant had made no attempt to comply with the Orders and had committed fraud in the administration of the estate. The Court discussed the possible sanctions for contempt, which include:
1. Imprisonment for such a period and on such terms as are just.
2. Imprisonment if the person fails to comply with the term of the Order.
3. A fine to be paid to the Provincial Treasurer.
4. A Order to do or refrain from doing an act.
5. An Order to pay such costs as are just.
6. An Order to comply with any other order that the Judge considers necessary.
In Re Penna Estate, the Court considered the applicable sentencing principles and found that the appropriate sanction in the circumstances was a term of imprisonment. The Defendant was sentenced to 14 months. Furthermore, because this was a civil contempt, there was no method of parole as there is in criminal matters.
A sobering lesson for all who are the subject of civil Court Orders, indeed.
Sharon Davis – Click here for more information on Sharon Davis.