Manis v. Manis [Indexed as: Manis v. Manis]

55 O.R. (3d) 758

[2001] O.J. No. 3672

Docket No. C36534

Court of Appeal for Ontario

McMurtry C.J.O., Abella and MacPherson JJ.A.

September 18, 2001

Contempt of court -- Disobedience of court order -- Family law -- Husband ordered to discharge mortgage on matrimonial home and make arrangements for substitute security for joint line of credit in which wife was jointly liable -- Husband disobeyed those orders and made questionable voluntary assignment in bankruptcy -- Husband properly found in contempt of court -- Husband could not argue that compliance with orders would constitute preference in favour of wife and bank contrary to Assignments and Preferences Act and Bankruptcy and Insolvency Act as husband had not complied with orders for four months before making assignment in bankruptcy -- Orders did not require husband to make payment of money within meaning of rule 60.11(1) of Ontario Rules of Civil Procedure -- Sentence of six months' imprisonment appropriate -- Assignments and Preferences Act, R.S.O. 1990, c. A.33 -- Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 -- Ontario Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rule 60.11(1).

In addition to being ordered to make an equalization payment to his wife and to pay child and spousal support, the appellant was ordered to take all necessary steps to remove and discharge the mortgage registered against the matrimonial home and to make arrangements for substitute security for a joint line of credit in which his wife was jointly liable. He did not comply with the mortgage and credit line order. Instead, he stopped making payments on the mortgage and defaulted on the line of credit. He also made a voluntary assignment in bankruptcy even though there was no evidence that any creditor had made a demand on him. His wife brought contempt proceedings against the appellant. He was found in contempt and was sentenced to six months' imprisonment. The appellant appealed.

Held, the appeal should be dismissed.

The appellant was aware of the order and failed to comply with it. His submission that he could not have complied with the order relating to providing alternate security for the mortgage and the line of credit to the bank because to do so would have constituted a preference in favour of his wife and the bank, contrary to s. 4(2) of the Assignments and Preferences Act and ss. 95 and 96 of the Bankruptcy and Insolvency Act could not succeed because he did not comply with the order for about four months before he invoked the Bankruptcy and Insolvency Act. Non-compliance with the order through late and questionable invocation of the Bankruptcy and Insolvency Act was an impermissible collateral attack on a valid court order.

The order requiring the appellant to arrange alternate security for the mortgage and the line of credit did not require him to make a payment of money within the meaning of rule 60.11(1) of the Rules of Civil Procedure.

The appellant was properly found in contempt.

Any difficulties the appellant was experiencing in complying with the orders was entirely his own fault. The appellant had almost completely abdicated his responsibilities as a spouse and a parent. This abdication, coupled with his cavalier and continuous non-compliance with court orders, made the sentence of six months' imprisonment appropriate.

APPEAL from a judgment finding an appellant in contempt of court and from a sentence.

Cases referred to Bank of Montreal v. Coopers Lybrand Inc. (1996), 1996 12088 (SK CA), 144 Sask. R. 207, 137 D.L.R. (4th) 441, 124 W.A.C. 207, [1996] 8 W.W.R. 153, 40 C.B.R. (3d) 161, 23 R.F.L. (4th) 415 (C.A.); Bhatnager v. Canada (Minister of Employment & Immigration), 1990 120 (SCC), [1990] 2 S.C.R. 217, 71 D.L.R. (4th) 84, 36 F.T.R. 91n, 111 N.R. 185, 43 C.P.C. (2d) 213; R. v. Litchfield, 1993 44 (SCC), [1993] 4 S.C.R. 333, 14 Alta. L.R. (3d) 1, 86 C.C.C. (3d) 97, 25 C.R. (4th) 137; R.J.R.-MacDonald Inc. v. Canada (Attorney General), 1994 117 (SCC), [1994] 1 S.C.R. 311, 60 Q.A.C. 241, 111 D.L.R. (4th) 385, 164 N.R. 1, 20 C.R.R. (2d) D-7, 54 C.P.R. (3d) 114; Wilson v. R., 1983 35 (SCC), [1983] 2 S.C.R. 594, 26 Man. R. (2d) 194, 4 D.L.R. (4th) 577, 51 N.R. 321, [1984] 1 W.W.R. 481, 9 C.C.C. (3d) 97, 37 C.R. (3d) 97 Statutes referred to Assignments and Preferences Act, R.S.O. 1990, c. A.33, s. 4(2) Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, ss. 95, 96 [as am.] Rules and regulations referred to Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rule 60.11

Peter B. Cozzi, for appellant. Avra Rosen, for respondent.

The judgment of the court was delivered by

MACPHERSON J.A.: --

A. Introduction

[1] This is an appeal from the judgment of O'Connell J. dated June 13, 2001 which ordered that the appellant, Warren Manis, be committed to prison for a period of six months unless he purged his contempt by taking two specific steps by June 28, 2001.

[2] At the conclusion of the appellant's submissions at the hearing on September 6, 2001, the court did not call on the respondent's counsel to make submissions. The court dismissed the appeal, with reasons to follow. These are those reasons.

B. Factual Background

[3] Warren Manis, a chartered accountant and licensed securities dealer, and the respondent, Gail Manis, were married in 1985. There are two children of the marriage, Erica (age 11) and Jay (age 4). Mr. and Ms. Manis separated in January 1997, two months after Jay's birth.

[4] Unfortunately, in April 1999, Ms. Manis was diagnosed with breast cancer. She underwent a lumpectomy in April 1999 and daily radiation in the summer of 1999. In July 2000, Ms. Manis was diagnosed with bone cancer in her sternum. She is currently undergoing weekly chemotherapy treatments.

[5] In October 2000, Lane J. presided over a four-week trial dealing with a wide range of matrimonial issues. In a judgment dated November 30, 2000, he ordered Mr. Manis to pay his wife an equalization payment of $415,486, child support of $2,333 per month (on the basis of imputed income of $205,000) and spousal support of $4,750 per month.

[6] Lane J. also ordered Mr. Manis to take steps to deal with the mortgage on the matrimonial home and with a joint line of credit. Since these are the two components of Lane J.'s order that gave rise to the subsequent contempt order made by O'Connell J., I set them out in full:

8. THIS COURT ORDERS AND ADJUDGES that the Respondent (Husband) shall take all steps as are necessary to remove and discharge in full the mortgage currently registered against the matrimonial home, being premises municipally known as 313 Hillhurst Boulevard, Toronto, Ontario, in favour of the Royal Bank, by attending upon the mortgagee and company with a representative of the Petitioner (Wife), within the next two weeks, to make arrangements for a substitute security for it.

9. THIS COURT ORDERS AND ADJUDGES that the Respondent (Husband) shall further attend upon the Royal Bank, within the next two weeks, to make arrangements for substitute security for the joint line of credit in which the Petitioner (Wife) is jointly liable, as this debt is a debt of the Respondent (Husband).

[7] The reason for para. 8 of the order was Mr. Manis' concession that, in Lane J.'s words, "the mortgage on the matrimonial home is a debt of Mr. Manis secured on Mrs. Manis' home". In a similar vein, para. 9 of the order related to $90,000 in debts run up by Mr. Manis after the separation.

[8] Lane J. also ordered Mr. Manis not to deplete his assets until the equalization payment had been made and the mortgage removed from the matrimonial home.

[9] Mr. Manis did not comply [with] the components of Lane J.'s order relating to the mortgage and line of credit. He took no steps to arrange for substitute security for the mortgage. Instead, in early 2001, he stopped making payments on the mortgage which, by August 2001, resulted in the home being sold by the Royal Bank under power of sale proceedings. Mr. Manis also did nothing, at least until mid-June 2001, to comply with the component of the order relating to the joint line of credit. Instead, he defaulted on the line of credit.

[10] Rather than comply with Lane J.'s order, Mr. Manis took two steps.

[11] First, he appealed it, which was his right. However, he did not bring a motion to stay any of Lane J.'s judgment. He also did not take any steps to perfect the appeal. On May 18, 2001, the appeal was dismissed for delay by the Registrar of this court.

[12] Second, Mr. Manis made a voluntary assignment in bankruptcy on April 2, 2001. He did this even though there was no evidence that any creditor had made a demand on him. One of the consequences of this step was that Mr. Manis, who had imputed income of $205,000 for the previous year, could no longer practise as a chartered accountant or a securities dealer.

[13] Ms. Manis brought contempt proceedings against Mr. Manis for his failure to comply with Lane J.'s order. O'Connell J. conducted a hearing and made several findings. He concluded that Mr. Manis had not complied with paras. 8 and 9 of Lane J.' s order relating to the mortgage on the matrimonial home and the joint line of credit. He also found that Mr. Manis had disobeyed the non-depletion component of the order: "On the same day that Mr. Justice Lane forbid him from depleting his assets, he withdrew capital totalling $30,000." O'Connell J.'s conclusion concerning Mr. Manis' conduct was:

Mr. Manis has repeatedly failed to comply with Mr. Justice Lane's judgment. In fact, it appears he has no interest whatsoever in obeying that judgment. His actions are deliberate and wilful. He has not breached one aspect of the judgment but has breached several and enough is enough.

[T]he assignment [in bankruptcy] by Mr. Manis was a malicious and voluntary act, especially when I consider his business background as a chartered accountant and a securities dealer, and his continuing lifestyle.

[14] Turning to the question of punishment, O'Connell J. imposed a jail term of six months. However, he gave Mr. Manis 15 days to purge his contempt by taking two steps: "removing the mortgage registered against 313 Hillhurst Boulevard, Toronto (former matrimonial home), and remove Ms. Manis' name from the line of credit with the Royal Bank of Canada".

[15] On June 21, 2001, Mr. Manis appealed O'Connell J.'s order. On June 28, 2001, O'Connell J. conducted another hearing. He concluded that Mr. Manis had not purged his contempt. He had done nothing about the mortgage and, although he had approached the bank about the line of credit, he had received only a recommendation from the bank's solicitor that Ms. Manis be removed from the line of credit. Accordingly, O'Connell J. signed the warrant of committal.

[16] Also on June 28, 2001, Mr. Manis brought a motion in this court seeking a stay of O'Connell J.'s order pending the hearing and disposition of the appeal. This motion was heard by Simmons J.A. She dismissed the motion. In so doing, she applied the tripartite test in R.J.R.-MacDonald Inc. v. Canada (Attorney General), 1994 117 (SCC), [1994] 1 S.C.R. 311, 111 D.L.R. (4th) 385, which includes a consideration of the merits of the appeal.

[17] On the merits of Mr. Manis' appeal, Simmons J.A. concluded [at para. 43]:

In the result, I am not persuaded Mr. Manis has raised a serious question concerning the propriety of the finding of contempt or the imposition of a penalty of imprisonment. That said, I accept that the matters raised by Mr. Manis constitute a serious question for determination concerning the period of imprisonment imposed.

[18] Mr. Manis appeals from O'Connell J.'s finding of contempt and from the punishment of six months imprisonment.

C. Issues

[19] The issues on the appeal are:

(1) Did the motions judge err by finding that the appellant was in contempt of Lane J.'s order?

(2) If the answer to (1) is "No", did the motions judge err by imposing a punishment of six months' imprisonment on the appellant?

D. Analysis

(1) The contempt issue

[20] In order to make a finding of contempt of a court order, a court must be satisfied that the person had notice or knowledge of the existence of the court order and that he acted in contravention of it: see Bhatnager v. Canada (Minister of Employment and Immigration), 1990 120 (SCC), [1990] 2 S.C.R. 217, 71 D.L.R. (4th) 84. The appellant admits that these conditions are present in this case. He was aware of Lane J.'s order and he has not complied with significant components of it. However, the appellant contends that O'Connell J. should not have found him in contempt of Lane J.'s. order for two reasons.

[21] First, the appellant submits that he could not comply with Lane J.'s order relating to providing alternate security for the mortgage and the line of credit to the Royal Bank because to do so would have constituted a preference in favour of his wife and the Royal Bank. Since he was insolvent in June 2001, he submits that this preference would have violated both s. 4(2) of the Assignments and Preferences Act, R.S.O. 1990, c. A.33 and ss. 95 and 96 of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 ("BIA").

[22] The problem with this argument is that the appellant did not comply with Lane J.'s order for about four months before he invoked the BIA. Nor did he attempt to stay Lane J.'s judgment during that time period. He was, therefore, bound to comply; non-compliance through late and, in my view, questionable (no creditors were making demands) invocation of the BIA was an impermissible collateral attack on a valid court order. As expressed by McIntyre J. in Wilson v. R., 1983 35 (SCC), [1983] 2 S.C.R. 594 at p. 599, 4 D.L.R. (4th) 577:

It has long been a fundamental rule that a court order, made by a court having jurisdiction to make it, stands and is binding and conclusive unless it is set aside on appeal or lawfully quashed. It is also well settled in the authorities that such an order may not be attacked collaterally -- and a collateral attack may be described as an attack made in proceedings other than those whose specific object is the reversal, variation, or nullification of the order or judgment.

See also: R. v. Litchfield, 1993 44 (SCC), [1993] 4 S.C.R. 333, 86 C.C.C. (3d) 97, and Bank of Montreal v. Coopers Lybrand Inc. (1996), 1996 12088 (SK CA), 137 D.L.R. (4th) 441, 144 Sask. R. 207 (C.A.).

[23] In conclusion on this issue, I specifically endorse what Simmons J.A. said in her reasons [at para. 25] dealing with the appellant's motion for a stay of the contempt order:

[I]t is not now open to Mr. Manis to claim he should be excused from performance of obligations imposed in the judgment of Lane J. by virtue of statutory provisions he chose not to assert directly by seeking a stay of the judgment and diligently pursuing an appeal. To hold otherwise would be to allow litigants to decide whether or not to obey a court order depending on whether they perceive a basis for questioning the judgment and would amount to permitting an improper collateral attack on a valid and binding judgment of the court.

[24] The appellant's second argument flows from the wording of rule 60.11(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194:

60.11(1) A contempt order to enforce an order requiring a person to do an act, other than the payment of money, or to abstain from doing an act, may be obtained only on motion to a judge in the proceeding in which the order to be enforced was made.

(Emphasis added)

[25] The appellant contends that Lane J.'s order requiring him to arrange alternate security for the mortgage and the line of credit in effect requires him to pay money to the Royal Bank or to transfer his legal interest in his property to the bank; this, he submits, violates the underlined words of rule 60.11(1).

[26] I disagree. I would adopt Simmons J.A.'s analysis on this issue [at para. 28]:

Again, Mr. Manis filed no authority in support of his contention. In my view, the analysis of Morden J.A. in Forest v. Lacroix Estate (2000), 2000 5728 (ON CA), 48 O.R. (3d) 619 (C.A.) excludes the viability of this contention. Although the case deals with use of contempt powers to enforce payment of an order for support it is helpful because of the thorough review of the law in relation to the exception relating to judgments for "payment of money". Morden J.A. stated the following at page 636:

Beaulieu J. then referred at pp. 166-67 to the judgment of Smith J. in Merklinger v. Merklinger, May 3, 1993 (Ont. Gen. Div., No. 58885/90Q) in which she sentenced Mr. Merklinger to 90 days in jail for contempt, which judgment was upheld by this court on May 26, 1993 (Doc. C.A. C15269). It appears that the contempt in that case involved the non-discharge of an encumbrance on property. Accordingly, it would appear that the money judgment exception in the rules would not be applicable: see Berry v. Donovan (1893), 21 O.A.R. 14.

[27] In summary, the appellant had knowledge of Lane J.'s order and he chose not to comply with it. The basic prerequisites for a finding of contempt were, therefore, met. Neither of the two arguments advanced by the appellant serves as a basis for undermining such a finding.

(2) The punishment issue

[28] O'Connell J. imposed a punishment of six months' imprisonment pursuant to rule 60.11(5) which sets out six forms of punishment, including an order that the person in contempt "be imprisoned for such period and on such terms as are just".

[29] The appellant submits that this punishment is too harsh, especially since it was impossible for him to comply with O'Connell J.'s conditions for purging his contempt. The appellant submits that a more appropriate punishment would be time served (about ten weeks), or some form of sentence reduction coupled with house arrest or permission to serve the sentence on weekends.

[30] I disagree. Any present difficulty the appellant is experiencing in complying with Lane J.'s and O'Connell J.'s orders is entirely his own fault. When one reads Lane J.'s comprehensive reasons for judgment following a four-week trial and O'Connell J.'s reasons on the contempt motion, the only possible conclusion is that the appellant has almost completely abdicated his responsibilities as a spouse and a parent. He then coupled that abdication with cavalier and continuous non-compliance with court orders.

[31] O'Connell J. was entirely right to send the appellant to jail. Moreover, the six month term of imprisonment, unleavened by house arrest or weekend service, strikes me as appropriate and necessary.

E. Disposition

[32] The appeal is dismissed. The respondent is entitled to her costs of the appeal, including the motion for a stay before Simmons J.A.

Appeal dismissed.