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.
The recent decision of Brown J. in Re Willis Estate, 2009 CanLII 30681 (Ont. S.C.J.) addresses the issue of an appropriate sentence to impose on an attorney for property who has been found in contempt of a court order requiring him to account for his dealings with his mother’s property.
In that proceeding, the court ordered in January 2008 that a son produce an inventory of assets held by his mother either alone or jointly with him, and to provide a full accounting of all dealings with the joint assets.
The son failed to do so. Various further orders were made, and ultimately, a motion was brought to punish the contempt.
In making a ruling, Brown J. reviewed the court’s contempt power. “A court exercises its contempt power to uphold the dignity and process of the court, thereby sustaining the rule of law and maintaining the orderly, fair and impartial administration of justice.”
Brown J. then considered whether the son had, in fact, complied with the orders, and found that the contempt had not been purged.
Turning to sentencing, Brown J. noted the difference between criminal and civil contempt. The purpose of criminal contempt sentencing is to punish, whereas the purpose of civil contempt sentencing is coercive and persuasive, designed to enforce the rights of a private party and to secure compliance. As such, custodial sentences are rare, and lengthy custodial sentences even rarer. Incarceration, although not unheard of, is a sanction of last resort.
The sentence must be proportionate to the gravity of the offence and the degree of responsibility of the offender.
After considering the nature of the contempt, and various mitigating and aggravating factors, the court ordered that the son pay a fine of $7,000, failing which, he was to be jailed for 7 days. He was also to retain professionals to assist him in preparing the accounting and inventories. Costs were to be spoken to.
"Some day, a wise person in a position of authority will realize that a court of law is not the best forum for deciding custody and access disputes, where principles of common sense masquerade as principles of law." – Mr. Justice Joseph Quinn as quoted in the Globe and Mail.
Until that day, the fighting parents who appeared before Mr. Justice Quinn have been barred from court unless they obtain special leave. Looking at the context, it’s hard to argue they did not earn it: 25 court orders from 12 different judges over 7 years, three contempt motions, one suspended sentence, 12 different lawyers, 2000 pages of court filings.
An apparent lack of respect for the rulings of the Court by both litigants was a factor in this extraordinary Order. As Mr. Justice Quinn is quoted, "[b]oth sides have shown an inability to abide by court orders such that their access to this court should be restricted by the requirement to obtain leave."
Mr. Justice Quinn is further quoted as saying "[t]he parties have gorged on court resources as if the legal system were their private banquet table. It must not happen again,". It is easy to forget that courts are very expensive operations: rent, upkeep and salaries. An hour before a judge in court is not cheap for society, whether or not the litigants are represented by lawyers. As a purely editorial comment, it is heartening to see principled recognition of this fact.
The father, perhaps unsurprisingly given the reported facts, is apparently considering an appeal.
Enjoy the weekend,
TO BE IN CONTEMPT OR NOT TO BE IN CONTEMPT REGARDING ORDERS REQUIRING PAYMENTS OF MONEY – THAT IS THE QUESTION PART I OF II
In Forest v. Lacroix Estate (2000), 187 D.L.R. (4th) 280, the Ontario Court of Appeal (“C.A.”) affirmed that Rule 60.11 contempt orders cannot be used to enforce orders for payment of money.
In Forest, a testator had named his son trustee and sole beneficiary of his estate having no provisions for his common-law wife of 19 years. Despite there being an order specifically prohibiting the dissipation of the estate, the son dissipated a significant amount of the estate assets. The Trial Judge having made a finding of contempt, ordered the son committed to jail for 9 months unless he purged contempt within 28 days by paying the common-law wife. The Court of Appeal noted, following a review of the law, that there are other means by which support orders can be enforced.
In 2002, the C.A. in Murano v. Murano,  O.J. No. 3632 relied on the reasoning in Forest and held that there was no exception for family law matters.
In today’s and tomorrow’s blog I will touch upon the case of Dickie v. Dickie,  S.C.J. No. 8,  78 O.R. (3d)1 (Ont. C.A.), in which the C.A. and Supreme Court of Canada (“S.C.C”) deal with the availability of a contempt motion in respect of the failure of a party to comply with alleged orders requiring the payment of money.
Today’s blog will set out the background to Dickie; tomorrow’s blog will deal with the decisions of the C.A. and the S.C.C.
The case involves a dispute between husband and wife. Before the C.A. was the appeal by the husband from an order finding him in contempt of Court for failing to comply with orders requiring him to secure support obligations by providing an irrevocable letter of credit and to post security for costs. The motion Judge imposed a sentence of 45 days in jail for that contempt, which the husband served immediately. The husband pursued his appeal arguing that the motion’s Judge had no jurisdiction under Rule 60.11 of the Rules of Civil Procedure to make a contempt order because the underlying orders were orders requiring him to make a payment of money. The wife brought a preliminary motion before the C.A. submitting that the Court should refuse to entertain the appeal because of the husband’s wilful disregard for orders of the Court.
Thanks for reading. Part II tomorrow.
Read the transcribed version of "Tips for Managing and Controlling Estate Litigation – Conclusion""
During Hull on Estates Podcast #63, Craig Vander Zee and Bianca La Neve discussed various discretionary measures available to a court when making contempt orders.
Rule 60 of the Rules of Civil Procedure was referenced, as well as the decision in Belanger v. McGrade Estate (2003), 65 O.R. (3d) 829 (Ont. S.C.J.).
Read the transcribed version of "The Use of Contempt Procedures in Estate Matters"
During Hull on Estates Episode #45, Sean Graham and Paul Trudelle discuss the use of contempt procedures in estate matters. They reviewed Rule 60.11 of the Rules of Civil Procedure and focused on the failure of Estate Trustees to produce accounts and the resort to the contempt mechanisms in order to compel their production.
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,  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.”
Part V of the Succession Law Reform Act (“SLRA”) provides the legislative framework for claims by a dependent of an estate. It sets out:
(i) who is a dependent;
(ii) what rights a dependant has in relation to the estate;
(iii) the circumstances the court should consider in determining the amount of support that should be awarded; and
(iv) the kinds of orders the court can make for the satisfaction of a dependent support claim.
Rule 60.11 of the Rules of Civil Procedure explicitly states that a party may pursue a contempt motion in order to pursue those who violate court orders other than for the payment of money.
Some have argued that, even in the face of the language of Rule 60.11, support orders involving the payment of money should be enforceable through a contempt proceeding.
In 2000, in its decision of Forrest v. Lacroix Estate (2000) 187 D.L.R. (4th) 280, (Ont. C.A.) the Court of Appeal set aside a contempt order made as a result of a failure to pay a SLRA dependent support award, affirming that Rule 60.11 does not permit contempt orders for the payment of money.