Enforcement against judgment debtors often requires recourse to Rule 60 of the Rules of Civil Procedure. The Rule sets out various enforcement mechanisms, including writs of seizure, sale, and garnishment. Rule 60.18 also sets out how a judgment creditor may examine a debtor about their income and property, also known as an examination in aid of execution. Where a court order requires a person to attend such an examination, failure to do so may constitute contempt of court. The issue of the appropriate penalty to be issued in respect of a finding of contempt recently came before the Superior Court of Justice in Canada Mortgage and Housing Corporation v. Hart et al.
Lengthy History Begins with Default Judgment Against the Defendants
The judicial history involving the mother and daughter defendants in the Hart case is lengthy and convoluted. In short, the defendants were sued by First National Financial GP Corporation, who obtained a default judgment against them in 2010 and assigned the judgment to CMHC. Enforcement actions were subsequently taken, with various amounts being recovered between 2012 and 2018.
Defendants Commence Litigation Against CMHC
It was not until 2017 and 2018 that the defendants commenced two actions against CMHC, seeking to set aside the default judgment. Those actions were ultimately dismissed on the grounds of being “frivolous, vexatious and an abuse of process of the court.”
Even though the actions were dismissed, the defendants then brought a motion against CMHC and First National “based on the same or similar allegations raised in the two actions” that had been dismissed. This motion was dismissed; however, the defendant’s daughter appealed, only to have the appeal dismissed. About one week after the dismissal of the appeal, the defendants brought another motion seeking to set aside the original default judgment.
CMHC Takes Steps for Examinations in Aid of Execution and Brings Contempt Proceeding
After dismissing the appeal, CMHC served notices of examination on the defendants, but they did not attend. CMHC then brought a motion to require the defendants to attend the examination, and as a result, the Court granted a Debtor Examinations Order; however, the defendants still refused to attend. CMHC, therefore, brought a contempt proceeding. In late 2022, the defendants were found in contempt of the Debtor Examination Order. However, the Court also allowed the defendants to “purge” their contempt by attending an examination in aid of execution the following month and providing relevant financial documentation. They did not do so, and in January 2023, the Court moved into the penalty phase of the contempt motion. At that hearing, the Court provided the defendants with a “last chance” to attend such an examination and produce documentation before a subsequent hearing in March 2023. Again, they failed to comply.
CMHC Requests that Penalty Phase Against Defendant Mother Be Adjourned Sine Die
At the March hearing, the defendant’s mother advised she had been unaware of the status of things. She agreed to attend an examination to aid execution and provide the required financial documentation. The defendant’s daughter continued to object to the original default judgment. Nevertheless, the Court provided a further opportunity for the defendants to attend an examination and provide documents while setting a return date for a hearing of the penalty phase for August 2023.
Daughter Found to Be “Vexatious Litigant”
In the meantime, the defendant’s daughter continued to bring motions against CMHC, seeking to set aside the various court orders to which she was subject. This culminated in an application by CMHC to have her declared a “vexatious litigant,” which was granted by the Court. She was, therefore, ordered not to bring any further proceedings without leave. Despite this, she filed a further motion.
In Determining the Penalty to Impose on the Daughter, the Court Considers the Objectives of Sanctions and Various Factors Identified in Previous Case Law
In August 2023, the parties submitted to the Court respecting the appropriate penalty for the finding of contempt. In its decision, released in November 2023, the Court referred to Rule 60.11, which grants the Court the power to imprison a person in contempt, issue a fine, or require a person to pay costs, among other remedies. The Court noted the two purposes of a penalty for civil contempt, namely “(i) to enforce compliance with a court order, and (ii) to ensure societal respect for the courts.” In referring to the earlier decision of Niagara (Municipality) (Police Services Board) v. Curran, the Court also noted the four penalty options “generally imposed upon a finding of civil contempt,” namely: a suspended sentence, a fine, incarceration or no penalty at all (“usually where the contempt has been purged”).
The Court referenced the various factors to be considered when determining the proper sentence for civil contempt, as discussed in Boily v. Carleton Condominium Corp. 145. These specific factors include the proportionality of the penalty to the wrongdoing, mitigating and aggravating factors, the need for “deterrence and denunciation,” the penalties in similar cases, and the reasonableness of a fine or imprisonment.
Defendant’s Contempt Found to Reflect “An Almost Complete Disregard for the Court’s Process”
Concerning proportionality, the Court noted that the conduct of the defendant’s daughter had led to substantial cost awards and that her failure to provide the relevant information and attend examinations in aid of execution had gone on for more than a year. Her contempt had been “serious, repeated, over a considerable period, and [reflected] an almost complete disregard for the court’s process.”
Regarding mitigating and aggravating factors, the Court observed that the defendant’s daughter had responded to court dates and been self-represented, had tried to appeal or modify the various court orders she objected to, and had provided some financial documentation (however limited). Further, the Court was uncertain whether she truly understood the impact of her conduct (although her actions were “plainly deliberate and not due to mistake or misunderstanding”). On the other hand, she had continued to refuse to accept court decisions, had deliberately failed to comply with court orders, had failed to purge the contempt despite multiple opportunities to do so, had continued to commence frivolous litigation, had been deemed a “vexatious litigant,” had flagrantly not complied with orders and had not shown any remorse.
With respect to the need for deterrence and denunciation and penalties in similar cases, the Court emphasized the need for a penalty that would serve “as a disincentive to those who might consider breaching court orders.” It noted that imprisonment could be ordered, although this was a “sanction of last resort,” and cases in which it was ordered tended to involve “repeated and serious instances of non-compliance.” The Court also noted that conditional sentences were likewise permissible.
On the issue of the reasonableness of a fine or incarceration, the Court concluded that the defendant was “wholly entrenched in her belief and position that the courts [had] made the wrong decision in granting the Judgment and that CMHC [had] no entitlement to enforce any part of the Judgment.” Further, the Court noted her statements respecting her “poor financial situation” and found it unlikely a fine would be paid.
Court Orders Conditional Sentence as Penalty for Contempt
Ultimately, the Court concluded that a period of incarceration was warranted so that the defendant would realize “the seriousness of her situation,” that her conduct was unacceptable, and that she needed to comply with orders of the court. The Court, therefore, ordered a conditional sentence of house arrest for 60 days and imposed various other conditions for that duration. She was also ordered again to participate “in a meaningful and fully responsive examination in aid of execution” and to deliver the relevant records.
Contact the Legal Team at Milosevic & Associates in Toronto for Legal Representation In Debt Collection Enforcement Matters
The lawyers at Milosevic & Associates have significant experience representing clients in debt collection enforcement matters. They will provide practical and effective advice to recover outstanding debts and judgments. Contact us online or by phone at (416) 916-1387.