COURT OF APPEAL FOR ONTARIO
Strathy C.J.O., LaForme and van Rensburg JJ.A.
BETWEEN
H. Joseph Greenberg and Pepi Greenberg
Plaintiffs/Appellants
and
Steven J. Nowack
Defendant/Respondent
Martin Greenglass, for the appellants
Steven J. Nowack, acting in person
Heard: October 14, 2016
On appeal from the order of Justice Paul M. Perell of the Superior Court of Justice, dated February 1, 2016, with reasons reported at 2016 ONSC 808.
van Rensburg J.A.:
A. Overview
1This is an appeal of an order dated February 1, 2016. The order arises out of a contempt motion brought in the course of the efforts of the appellants, Joseph and Pepi Greenberg, to enforce a judgment against the respondent, Steven Nowack. The Greenbergs assert that the motion judge erred in law in refusing to find Mr. Nowack in contempt of various orders, in accepting Mr. Nowack’s unsworn submissions at the contempt motion as evidence, in ordering that Mr. Nowack complete a particular form of judgment debtor questionnaire in use in Alberta (the “Judgment Debtor Questionnaire”), and in discharging Mr. Nowack from any obligations under various orders made in the course of these proceedings, namely the orders of Master Glustein dated December 10, 2013, Firestone J. dated July 5, 2014, C.J. Brown J. dated November 12, 2014, Morgan J. dated March 27, 2015 and April 8, 2015, and his own orders of July 30, 2015 and November 18, 2015 (the “Prior Orders”).
2For the reasons that follow, I would allow the appeal. I would set aside the motion judge’s order dismissing the contempt motion and discharging Mr. Nowack from compliance with the Prior Orders. I would remit the matter of Mr. Nowack’s contempt back to the Superior Court for determination by another judge.
B. Facts
3Mr. Nowack is a former patient of the appellant Joseph Greenberg. In 2009, Dr. Greenberg and his wife, Pepi Greenberg, gave Mr. Nowack money (essentially their life savings) to invest on their behalf. After Mr. Nowack returned only a small portion of their funds, the Greenbergs commenced an action against Mr. Nowack in November 2012, claiming the return of their investments. In February 2013, the action was settled for the sum of $3.7 million. The settlement required Mr. Nowack to make payments to the Greenbergs in eight installments with a consent to judgment in the event of default. On July 3, 2013, after Mr. Nowack defaulted, the Greenbergs obtained a judgment in the sum of $3,552,000, inclusive of claim, interest and costs, with post-judgment interest at the rate of 3% per annum.
4The Greenbergs then attempted to enforce their judgment. It is unnecessary to outline all of the various steps they took (which are set out in detail in the reasons for decision of the motion judge). However, I will briefly summarize the main aspects of the judgment enforcement proceedings that led to the present appeal.
5Essentially, Mr. Nowack claimed from the outset of the enforcement proceedings that he is judgment-proof, but he failed to make financial disclosure so a meaningful examination in aid of execution could take place. The Greenbergs applied to the court repeatedly to obtain orders to compel Mr. Nowack to produce documents and to attend for examination. The various orders they obtained required Mr. Nowack to pay costs, now totaling $23,791.53. No payment has been made under the judgment or the costs awards.
6More importantly, although required to do so by various court orders, including two orders made by the motion judge in this case, Mr. Nowack failed to prepare an accounting of his various transactions using the Greenbergs’ funds.
7Mr. Nowack is subject to criminal charges for fraud. From time to time, he has claimed an inability to comply with orders to produce documents or an accounting in the Greenberg proceedings because the police seized his financial records in the course of his criminal prosecution. He relies on P.(D.) v. Wagg (2004), 2004 39048 (ON CA), 71 O.R. (3d) 229 (C.A.), where this court outlined the procedure to be followed before a litigant produces documents in his possession or control that are part of a Crown disclosure brief.
8This argument has been rejected throughout the enforcement proceedings in decisions that were not appealed. In his order dated December 10, 2013, Master Glustein (now Justice Glustein) ruled that the fact that documents had been seized by the police did not prevent Mr. Nowack from seeking copies of his own documents from the police or obtaining copies from his banks, his credit card companies and the Canada Revenue Agency. This order was varied by Master Dash, so that it was clear Mr. Nowack did not have to provide documents in the possession of the police. And Morgan J. rejected Mr. Nowack’s claim that he was unable to use his own documents that had been seized by the police, when sentencing Mr. Nowack for contempt.
9The Greenbergs have moved for contempt for non-compliance with court orders on four occasions, including the motion resulting in the order now on appeal. While several motions were dismissed with terms requiring Mr. Nowack’s disclosure of specific documents, Morgan J., after a number of attendances, found Mr. Nowack in contempt in March 2015. At the penalty hearing, after Mr. Nowack was found not to have purged his contempt, he was sentenced to 15 days in jail. Morgan J. ordered that Mr. Nowack was required to comply with an earlier order of Brown J. directing the production of certain documents, and that any failure to comply would be treated as a separate matter of contempt.
10Mr. Nowack served his sentence, and then again failed to comply with the outstanding orders. The Greenbergs brought another motion for contempt. They asserted that Mr. Nowack was in contempt of the orders of Master Glustein and Justices Firestone, Brown, and Morgan.
11On the return of the motion on July 21, 2015, the motion judge seized himself with all further matters in the Greenbergs’ enforcement proceedings. He adjourned the contempt motion to July 30, 2015, stating that he was providing Mr. Nowack the opportunity to “purge his contempt” by delivering certain specific documents, including signed authorizations to third parties to produce documents, and giving notice to Crown counsel with carriage of the criminal proceedings to show cause why the Crown should not be ordered to provide the Greenbergs with copies of documents that had been seized. As the motion judge observed, his intent in making the order was to find a means for the Greenbergs to obtain the information needed to satisfy themselves about Mr. Nowack’s resources to satisfy his judgment debt, and to determine whether he might have hidden his assets from creditors.
12Indeed, on July 30, 2015, as a result of Mr. Nowack executing authorizations to permit third parties to provide documentation to the Greenbergs, and as a result of the Crown agreeing to facilitate production of Mr. Nowack’s bank records that were in the possession of the Crown, the motion judge concluded that, while he found beyond a reasonable doubt that Mr. Nowack was in contempt of several court orders, he had now purged his contempt. (In a subsequent endorsement, at Mr. Nowack’s request, the motion judge clarified that the declaration of contempt was in respect of the orders of Brown J. dated November 12, 2014 and Morgan J. dated April 8, 2015, and that Mr. Nowack would not be sanctioned for contempt.) However, he ruled that Mr. Nowack remained liable to perform his obligations as a judgment debtor. He ordered Mr. Nowack to attend an examination in aid of execution, and the Ministry of the Attorney General to produce bank records set out in the order to Mr. Nowack and the Greenbergs. He also ordered Mr. Nowack, to the best of his ability, to use these documents to prepare an accounting of the funds received from the Greenbergs, “and the outgoing and incoming use and return of these funds (a tracing of funds)”. In making these orders, the motion judge ensured that, despite Mr. Nowack’s lack of co-operation, documents would be provided by third parties to the Greenbergs and to Mr. Nowack to enable him to fulfill his obligations.
13On November 18, 2015, the motion judge ordered Mr. Nowack to provide an accounting, as previously ordered, by December 18, 2015, failing which the Greenbergs could bring a contempt motion.
14Mr. Nowack did not provide any accounting by the above deadline and the Greenbergs moved for a contempt order. This motion was heard on January 22, 2016, and led to the order of the motion judge, which is the subject of this appeal.
C. Decision of the Motion Judge
15The contempt hearing was brief. The Greenbergs had filed affidavit evidence in support of the allegations of contempt. Mr. Nowack was self-represented. He delivered no evidence in response to the motion. Rather, he provided oral submissions in an attempt to explain his failure to provide an accounting. He said that he had attempted to do an accounting, that the records he had received from the Crown were inadequate to provide the details of the funds he had received from the Greenbergs, that in any event he had been advised by counsel not to provide an incomplete accounting, and that he could not afford to obtain copies of his financial records and had therefore provided authorizations to counsel for the Greenbergs to obtain these records on his behalf. Counsel for the Greenbergs reiterated their request that Mr. Nowack be found in contempt. The motion judge ended the hearing and reserved his decision.
16In his written reasons, the motion judge dismissed the Greenbergs’ motion for contempt. He ordered Mr. Nowack to complete the Judgment Debtor Questionnaire, following which the Greenbergs could conduct a judgment debtor examination. The motion judge also discharged Mr. Nowack from his obligations under the Prior Orders.
17The motion judge stated that the Greenbergs’ contempt motion failed each branch of the test for contempt. He noted that a contempt motion cannot be used to enforce the payment of money: Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rr. 60.05 and 60.11, and that imprisonment should not be used as a coercive measure to compel the payment of debts. The motion judge concluded that, while Mr. Nowack’s performance was not perfect, his recent failures regarding production were not flagrant or contumelious.
18The motion judge noted that the Ontario Law Reform Commission had recommended the adoption of a procedure to compel judgment debtors to attend at an enforcement office to complete a financial questionnaire. While the procedure had not been adopted in Ontario, the requirement of providing directed financial disclosure through the completion of a questionnaire in a prescribed form was adopted in Alberta as part of the judgment enforcement process through the amendment of its Civil Enforcement Regulation, Alta. Reg. 276/1995. The motion judge held that Mr. Nowack’s sworn completion of such a form was appropriate in this case for the purpose of getting the enforcement process back on track and to determine whether Mr. Nowack has the financial resources to satisfy his judgment debt to the Greenbergs.
D. Issues on Appeal
19The Greenbergs raise four arguments on appeal.
20First, they say that the motion judge erred in concluding that no branch of the three-part test for civil contempt was met. They say that (1) the orders in question were clear and unequivocal; (2) Mr. Nowack had clear notice of the orders and what was required; and (3) Mr. Nowack intentionally failed to do the acts the orders compel.
21Second, the Greenbergs contend that the motion judge erred in how he conducted the contempt hearing. They say that, in concluding that Mr. Nowack had not breached the orders intentionally, the judge must have accepted that Mr. Nowack had an excuse for not complying with the orders, and after he offered no evidence in response to the motion, the judge erred in relying on Mr. Nowack’s submissions. The Greenbergs were taken by surprise when they learned from the reasons that the motion judge treated such submissions as sworn evidence, particularly when they had not been afforded the opportunity to cross-examine Mr. Nowack.
22Third, the Greenbergs say that the motion judge erred in ordering Mr. Nowack to complete the Alberta Judgment Debtor Questionnaire. The Greenbergs contend that completion of this form provides them with less than they have available under the existing orders and the judgment enforcement process under Ontario’s Rules, and is inadequate as a means to assist in their enforcement of Mr. Nowack’s obligations.
23Finally, the Greenbergs say that the motion judge erred in discharging Mr. Nowack’s obligations under the Prior Orders, with the result that they are deprived of the benefit of such orders, including the ability to enforce costs awards properly made in their favour.
24Mr. Nowack submits that the motion judge did not err in making the order under appeal. He renews his argument based on Wagg that he has no ability to produce documents in the Crown’s possession, and that he had been advised not to provide a partial accounting.
(1) Did the Motion Judge Err in Finding the Elements of Civil Contempt Were Not Proven?
25The test for civil contempt was articulated by the Supreme Court in Carey v. Laiken, 2015 SCC 17, [2015] 2 S.C.R. 79, at paras. 33-35:
The order alleged to have been breached must state clearly and unequivocally what should and should not be done;
The party alleged to have breached the order must have had actual knowledge of it; and
The party allegedly in breach must have intentionally done the act that the order prohibits or intentionally failed to do the act the order compels.
26Each element of civil contempt must be proven beyond a reasonable doubt: Carey v. Laiken, at para. 32. A judge has discretion to decline to make a contempt finding where the three-part test has been met where it would be unjust to do so, such as where the alleged contemnor has acted in good faith to take reasonable steps to comply with the relevant court order: Carey v. Laiken, at para. 37.
27In this case, at para. 48 of his reasons, the motion judge described the three-part as follows: first, whether the order clearly and unequivocally states what should and should not be done; second, whether the alleged contemnor disobeyed the order deliberately and wilfully; and third, whether the contempt was proven beyond a reasonable doubt. This is inconsistent with how the test is described in Carey v. Laiken. The question is not whether the alleged contemnor wilfully and deliberately disobeyed the relevant order. Rather, what is required is an intentional act or omission that breaches the order. “The required intention relates to the act itself, not to the disobedience; in other words, the intention to disobey, in the sense of desiring or knowingly choosing to disobey the order, is not an essential element of civil contempt”: Robert J. Sharpe, Injunctions and Specific Performance, loose-leaf, 4th ed. (Toronto: Canada Law Book, 2015), at para. 6.190 (citations omitted). Requiring the alleged contemnor to have intentionally disobeyed a court order would result in too high a threshold: Carey v. Laiken, at para. 38.
28Further, the motion judge referred to Mr. Nowack’s failures as “not flagrant or contumelious” (at para. 65). In Carey v. Laiken, at para. 29, the Supreme Court was clear that contumacy – meaning “the intent to interfere with the administration of justice” – is not an element of civil contempt, and that a lack of contumacy is correspondingly not a defence.
29Accordingly, the Greenbergs were not required to prove that Mr. Nowack intended to disobey the Prior Orders. Demonstrating that Mr. Nowack failed to comply with an act the Prior Orders compelled, namely the production of his financial documents and preparation of an accounting, would be sufficient. The Greenbergs put forward a prima facie case that Mr. Nowack intentionally failed to comply with the Prior Orders. In his decision of November 18, 2015, the motion judge invited the Greenbergs to move for a contempt order if Mr. Nowack failed to provide an accounting by December 18, 2015. There is no question that he failed to do so – indeed, the motion judge acknowledged this at para. 41 of his reasons.
30There did not seem to be any question in the contempt proceedings about the first two elements of the test – whether the orders were clear and unambiguous and that Mr. Nowack had actual notice of their requirements. The orders in question required Mr. Nowack to provide an accounting to the Greenbergs and to disclose documentation pertaining to his financial affairs. These requirements were clear and unambiguous. Mr. Nowack also had actual knowledge of the requirements of the orders which were made in his presence. Despite Mr. Nowack’s repeated attendances, he failed to produce documents and to provide an accounting, leading the motion judge to repeat these requirements, impose deadlines, and invite the Greenbergs to renew their contempt motion in the event of continued non-compliance.
31It is difficult therefore to understand the motion judge’s conclusion that the contempt motion failed all three prongs of the test for contempt. Indeed, the motion judge did not explain his conclusion, other than that he was unwilling to find contempt (and to imprison Mr. Nowack) in the context of the enforcement of a civil judgment. The conclusion may also stem from the motion judge’s finding that Mr. Nowack’s performance was not contumelious. In any event, as Blair J.A. stated in Bell ExpressVu Limited. Partnership v. Torroni, 2009 ONCA 85, 94 O.R. (3d) 614, at para. 23, a motion judge “must at a minimum turn his or her mind to the test and apply the elements of the test properly.” The motion judge failed to do so here.
32On a motion for contempt, it is proper for a court to emphasize the goal of engaging compliance rather than punishment: Chiang (Re), 2009 ONCA 3, 93 O.R. (3d) 483, at para. 11. Civil contempt is regarded primarily as coercive rather than punitive: Carey v. Laiken, at para. 31, citing Injunctions and Specific Performance, at para. 6.100. Contempt is not available to enforce the payment of a monetary judgment, however there is no question that breach of a court order requiring financial disclosure in the course of enforcement of a judgment debt can ground a finding of civil contempt. In Chiang, for example, where contempt proceedings arose out of a series of orders made in the course of the enforcement of a judgment for the payment of money, this court described the case as “one of the worst cases of civil contempt to come before [the] court”: at para. 1. See also Doobay v. Diamond, 2012 ONCA 580, 297 O.A.C. 190; GM Textiles Inc. v. Sidhu, 2016 ONSC 2055; Cellupica v. Di Giulio, 2011 ONSC 1715, 105 O.R. (3d) 687.
33For the foregoing reasons, I conclude that the motion judge did not properly turn his mind to the elements of the three-part test for civil contempt, when he concluded that the Greenbergs had not met any branch of the test, and dismissed the motion for contempt.
34I note that, in his oral submissions before this court, Mr. Nowack asserted that he has been unable to disclose documents in his possession that were part of the Crown disclosure brief, or to use such documents to prepare an accounting. This argument was not in fact made before the motion judge at the contempt hearing as an excuse for Mr. Nowack’s failure to perform his obligations, including the accounting directed in the motion judge’s own orders of July 30, 2015 and November 26, 2015. Indeed, by the time of the contempt hearing, in the multiple attendances before him, the motion judge had taken extensive steps to address any proffered residual concerns of Mr. Nowack about producing or using documents that had been in the Crown’s brief. This included putting Crown counsel in Mr. Nowack’s criminal proceedings on notice, and then engaging the Crown’s cooperation to produce documents. Mr. Nowack’s excuse at the contempt motion was that the documents he received from the Crown were insufficient to permit him to prepare an accounting and that he could not afford to get copies of cheques from his banks. His reliance on the Wagg issue is therefore no answer to the issues on appeal.
(2) Did the Motion Judge Err in Relying on Mr. Nowack’s Submissions as Evidence?
35The contempt hearing was conducted in a summary manner. The motion judge did not invite oral testimony. Mr. Nowack, who was self-represented, had filed no evidence. He did, however, make submissions as to why he failed to provide an accounting.
36Rule 39 requires evidence on a motion to be adduced by affidavit, cross-examination on an affidavit, the examination of a witness pending a motion, or by oral testimony at the hearing of a motion with leave.
37The motion judge adverted to the fact that no evidence had been put forward by Mr. Nowack in response to the contempt motion. He stated, at para. 43 of his reasons, “[b]efore the hearing, [Mr. Nowack] did not provide any affidavit evidence. At the hearing, Mr. Nowack, who had been sworn to tell the truth at earlier attendances, attempted to offer an explanation for his failure to provide the accounting.” The motion judge accordingly appears to have treated Mr. Nowack’s oral submissions as evidence.
38While the motion judge may well have been entitled to consider Mr. Nowack’s submissions as evidence, relying on the fact that he had previously been sworn as a witness, he ought to have informed the Greenbergs’ counsel that this was what he was doing, and afforded him the opportunity to cross-examine Mr. Nowack. I accept that the Greenbergs were taken by surprise by the motion judge’s apparent acceptance of Mr. Nowack’s brief explanation in his oral submissions as to why he had failed to comply with the outstanding orders. In these circumstances, to the extent that the motion judge relied on Mr. Nowack’s explanation to conclude that the Greenbergs had not met the test for contempt, he erred in doing so.
(3) Did the Motion Judge Err in Ordering Mr. Nowack to Complete the Judgment Debtor Questionnaire?
39The Greenbergs say that the motion judge erred in requiring Mr. Nowack to complete the Alberta Judgment Debtor Questionnaire when no one requested this relief in the contempt motion, and where the completion of the questionnaire was in lieu of other enforcement procedures that ought to have remained open to the Greenbergs.
40I agree with the Greenbergs’ submission that the Judgment Debtor Questionnaire provides for a narrower range of financial disclosure than would be available to them in an examination in aid of execution. Rule 60.18 allows a creditor to examine a debtor, among other things, about the reason for non-payment, the disposal of a debtor’s property before or after the making of the order, or any other matter pertinent to the enforcement of a judgment. The “transfer of property” section of the Judgment Debtor Questionnaire only requires the disclosure of property transferred within one year of the date of completion of the Questionnaire. Completion of the Judgment Debtor Questionnaire in 2016 therefore does not address what became of the Greenbergs’ investment monies for which judgment was granted in 2013, and in respect of which the various orders in the enforcement process were made.
41I note however that the motion judge did not expressly remove the Greenbergs’ rights to ask questions of Mr. Nowack along these lines; rather, at para. 64 of his reasons, he preserved the Greenbergs’ right to conduct a further examination in aid of execution of Mr. Nowack. I cannot conclude therefore that the Judgment Debtor Questionnaire requirement, in itself, would limit the Greenbergs’ further rights to enforce their judgment.
42The motion judge was firmly focused on the need to get the judgment debtor enforcement process back on track. To this end, it was not wrong for him to order Mr. Nowack to complete the Judgment Debtor Questionnaire. The error, however, was in coupling this relief with an order discharging Mr. Nowack from compliance with the Prior Orders mandating financial disclosure and an accounting, particularly when neither remedy was raised or addressed in argument before him. I will turn to this issue now.
(4) Did the Motion Judge Err in Discharging Mr. Nowack from Compliance with the Prior Orders?
43The motion judge discharged Mr. Nowack from further compliance with the Prior Orders. The Greenbergs assert that the motion judge erred in making such an order, that had the effect of setting aside the Prior Orders, without anyone having requested or having the opportunity to oppose such relief. They say that, not only have they lost the ability to continue to attempt to enforce the terms of the Prior Orders requiring specific financial disclosure and an accounting, they have lost the benefit of the costs awards contained in such orders.
44An order may only be set aside, amended or varied by a successful appeal or by a motion to set aside or vary under r. 37.14 or r. 59.06. It is not open to the court to set aside or vary an order on its own motion where this relief was not requested. Further, while a judge may discharge, set aside or vary an order where a finding of contempt has been made under r. 60.11(8), this rule does not authorize a judge to discharge any order on the court’s own motion - in contempt proceedings or otherwise.
45In this case, the motion judge did not discharge or set aside the Prior Orders. Rather, he discharged Mr. Nowack’s obligations under the orders. Such an order might well be warranted, where a judge concludes that an alleged contemnor has in fact complied with the requirements of an order or otherwise purged his contempt. In this case, however, the contempt motion was dismissed because the motion judge held that the Greenbergs had not met the three-part test. He did not find that Mr. Nowack had complied with the Prior Orders; at best, Mr. Nowack offered an excuse for not complying with certain requirements of the orders.
46It may be that, in discharging Mr. Nowack from the Prior Orders, the motion judge had in mind his order of July 30, 2015, declaring, after measures were put in place to obtain Mr. Nowack’s financial disclosure from third parties, that Mr. Nowack had purged his contempt of certain earlier orders. The July 30 order, however, stated that Mr. Nowack remained liable to perform his obligations as a judgment debtor and ordered, among other things, the preparation of an accounting of the Greenbergs’ funds. These were outstanding obligations imposed on Mr. Nowack personally that only he could perform. There was no explanation for why the motion judge saw fit to discharge Mr. Nowack from that order, as well as his subsequent order of November 18, 2015.
47In my view, the motion judge erred in discharging Mr. Nowack from compliance with the Prior Orders. There was no basis for granting such relief simply because the motion judge concluded that the Greenbergs had not met the three-part test for contempt, or as part of the dismissal of their contempt motion. The relief, which no one had requested, was prejudicial to the Greenbergs and took away their rights under the existing orders without good reason.
E. Disposition
48For these reasons, I would allow the appeal. I would set aside the order of the motion judge dismissing the contempt motion and discharging Mr. Nowack’s obligations under the Prior Orders. I would remit the matter of Mr. Nowack’s contempt to the Superior Court for determination by a different judge.
49I would award costs of the motion in the court below and of this appeal to the Greenbergs on a partial indemnity basis. If the parties are unable to agree on the amounts, they may provide written submissions to this court. The Greenbergs are to serve and file their submissions within ten days of the release of these reasons. Responding submissions shall be served and filed within ten days of receipt of the Greenbergs’ submissions. There are to be no reply submissions. Submissions are limited to three pages, not including any bills of costs.
Released: “K.M.v.R.” December 16, 2016
“K. van Rensburg J.A.”
“I agree G.R. Strathy C.J.O.”
“I agree H.S. LaForme J.A.”
