Court of Appeal for Ontario

Date: 2017-04-21 Docket: C61514

Justices: Blair, Lauwers and Hourigan JJ.A.

In the Matter of the Bankruptcy of: Alma Maria Wallace (aka Alma Maria Belacic) of the City of Toronto, in the Province of Ontario

Counsel:

• Sean N. Zeitz, for the appellant, Brief & Associates Inc.
• Chris Dockrill, for the respondent, Alma Maria Wallace

Heard and released orally: April 21, 2017

On appeal from: the order of Justice Barbara A. Conway of the Superior Court of Justice, dated November 17, 2015.

Endorsement

[1] The Bankrupt, Alma Maria Wallace (aka Alma Maria Belacic), was required by order of Pattillo J. dated April 8, 2015 to execute a power of attorney with respect to her interest in a property in Croatia, which would enable the Trustee in Bankruptcy, Brief & Associates Inc., to complete a sale of the property. The Bankrupt did not appeal or seek a variation of that order and it remains in effect.

[2] The Bankrupt has refused to execute the power of attorney. While there was some dispute over the form the power of attorney should take, the Bankrupt made it clear in the "contempt" proceeding before Conway J., which is the subject of this appeal, that she would not sign any power of attorney.

[3] Instead of determining whether the Bankrupt was in contempt, because doing so would serve no practical purpose, the bankruptcy judge made an order granting the Trustee authority to sign the power of attorney on behalf of the Bankrupt in the form tendered by the Trustee, with one change: she redacted the last sentence that would have enabled the Trustee to assign its powers to a third party in Croatia. She ordered, nonetheless, that if it became necessary to transfer the power of attorney to Croatian counsel to facilitate the sale process, the Trustee could return to court to seek that relief.

[4] The Trustee appeals, not with respect to the main substance of the order, but with respect to the motion judge's refusal to make a finding of contempt and with respect to the redaction of the last sentence of the power of attorney. The Trustee seeks the Bankrupt's incarceration for contempt.

[5] The Trustee argues the bankruptcy judge erred by failing to find the Bankrupt in contempt and impose a penalty on the Bankrupt. The record might well justify a contempt finding, as the bankruptcy judge recognized. Instead of making that finding and imposing a penalty, the bankruptcy judge made an order providing the Trustee with a power of attorney that did not require the Bankrupt's approval. The Trustee argues the bankruptcy judge erred in considering that a contempt order would lack utility.

[6] We do not see any basis for interfering with the bankruptcy judge's decision. In our view, she made an order in relation to the power of attorney that on the record matched the Trustee's request for an effective power of attorney. There is no evidence before the court that the power of attorney with the judge's redaction is insufficient to accomplish its goal of permitting the Trustee to realize the bankrupt's Croatian assets.

[7] We do not condone the Bankrupt's conduct and emphasize to her that the failure to obey a court order is serious misconduct not to be continued. However, even if circumstances are such as to meet the three-stage test for contempt as set out in such authorities as Prescott-Russell Services for Children and Adults v. G. (N.), 82 O.R. (3d) 686 (C.A.), courts have long recognized the need to exercise caution prior to making a contempt order and, as counsel for the Trustee admits, making such an order is discretionary. The motion judge made a discretionary decision carving out instead an order that met the practical needs of the situation. We see no error in her doing so.

[8] The appeal is dismissed. We do not think this is an appropriate case for costs. There will be no order as to costs.

R.A. Blair J.A.

P. Lauwers J.A.

C.W. Hourigan J.A.