DATE: 20020425 DOCKET:C36425
COURT OF APPEAL FOR ONTARIO
DOHERTY, GOUDGE AND ARMSTRONG
B E T W E E N:
PETER McNAB
David P. Preger for the appellant
Appellant
- and -
LAURIE JOY LECHNER
Alla Koren for the respondent
Respondent
Heard: March 26, 2002
On appeal from the order of Justice E. M. MacDonald dated May 3, 2001.
BY THE COURT:
[1] The appellant appeals from the order holding him in contempt of a Mareva injunction which restrained him from disposing of or depleting his self-directed RRSP. The order appealed from went on to provide various forms of consequential relief to the respondent.
[2] There was ample evidence before the motions judge to sustain the conclusion that, in the face of the injunction, the appellant had deliberately depleted his RRSP account, something which it unambiguously prohibited. There is therefore no basis for interfering with the finding of contempt.
[3] The order below then sets out a series of sanctions.
[4] First, it provides that the appellant may purge his contempt by making payment of $33,475.87 to the respondent within 30 days, failing which the respondent may return to the motions judge to seek further sanctions. This sum is the very amount of the loss which the respondent alleges she suffered in the stock account she held jointly with the appellant and for which she claims damages in the underlying action. Moreover, this sum is greater than the value of the appellant’s RRSP when the injunction was imposed which was approximately $25,340.89.
[5] In our view, in effectively granting full judgment to the respondent for this part of her claim and in doing so in an amount greater than the value of the RRSP protected by the injunction, the motions judge imposed a consequence which was too disproportionate to the disobedience of the injunction to be sustained. That order provided no more than security in the underlying action, and then only for some $25,000. In this case, the appellant’s disobedience in failing to maintain this security, while not to be excused, carried little impact beyond the private dispute between these two parties. It lacked the significant public dimension seen in other contempt cases which would warrant a much more substantial penalty than is warranted here. To grant final judgment to one party and to do so for an amount significantly greater than that secured by the order is unreasonable.
[6] We therefore find that this first remedy imposed by the motions judge is sufficiently disproportionate that it must be set aside. In its place we would substitute an order that within 30 days the appellant pay into court to the credit of this action the amount secured by the injunction namely, $25,340.89 failing which the respondent may return to the motions judge to seek further sanctions.
[7] Second, the order below declares that the appellant has no right title or interest in the funds held in the joint stock account and directs that these funds, $44,538.30, be paid to the respondent. This effectively grants judgment to the respondent on a second part of her claim in the underlying action.
[8] The respondent seeks to uphold this aspect of the order on the basis that the motions judge on her own initiative must have converted the motion before her into a motion for judgment pursuant to Rule 37.13.
[9] We disagree. There is nothing in either the material filed on the motion or the brief endorsement of the motions judge to suggest that this is what was done in granting this remedy. Moreover, in our view, it would not have been an appropriate case to do so. The central issue on the motion was the question of contempt. It was not a case where the disposition of the issue on the motion leads inevitably to the outcome of the action. See Buffa v. Gauvin (1994), 1994 7276 (ON SC), 18 O.R. (3d) 725.
[10] Viewed as an additional remedy for the contempt finding, the granting of the declaration that the appellant has no interest in the funds in the joint account gives full judgment to the respondent on a second part of her claim and has the same defect as the first remedial order. To grant final judgment for $44,538.30 on top of final judgment for $33,435.78 because the respondent failed to maintain security of some $25,000 for this private lawsuit is unreasonable. In the circumstances, it is simply too disproportionate to be sustained and we would set it aside.
[11] However, we would not interfere with that aspect of this order which directs that the funds be paid out to the respondent. The appellant can make any claim he asserts to these funds in his counterclaim. The appellant having dissipated one fund relevant to this lawsuit contrary to court order, it is appropriate that this second fund, which is even more central to the dispute between the parties, be held by the respondent unless and until a trial judge finds otherwise.
[12] The third remedy imposed below was to strike the appellant’s defence and counterclaim. While no reason was given for ordering this relief, the flow of the very short endorsement suggests that this too was imposed as a consequence for the contempt finding. Moreover, while this relief was requested in the notice of motion as a separate consequence for failure to comply with a prior costs award of $1,000 to be paid forthwith, such an order would not have been reasonable in these circumstances where this was the first attempt to enforce those costs, a portion of them had already been paid, the appellant was not present at the motion, was unrepresented and was known to be seeking legal aid. Thus, viewing this remedy as we do, as an additional consequence imposed for the contempt, it suffers from the same disproportionality as the first two remedies and for the same reasons we would set it aside.
[13] The fourth remedy imposed was an order that the appellant pay $9,000 to the respondent to compensate her for interest paid on the line of credit which she used to support the joint stock account. This relief was not sought below and can only have been imposed as an additional consequence for the contempt. It represents final judgment to the respondent on yet a third part of her claim in the underlying action. For the reasons given we would also set it aside, as it is also unreasonable in the circumstances.
[14] Turning to costs, we would not alter the costs ordered below, because the respondent was entitled to bring a contempt motion in these circumstances and succeeded in this, her central claim. On appeal the appellant has been unsuccessful in reversing this finding. While some aspects of the remedy have been reversed, this proceeding has remained fundamentally about the appellant’s contempt and on this the respondent has succeeded. Hence we would make no order as to the costs of this appeal.
[15] In summary, the appeal is allowed but only to the extent of altering the remedies provided in the order below consistent with these reasons. No costs of the appeal.
Released: April 25, 2002 “DD”
“Doherty J.A.”
“S.T. Goudge J.A.”
“Robert P. Armstrong J.A.”