Court File and Parties

COURT OF APPEAL FOR ONTARIO DATE: 20231215 DOCKET: COA-22-CV-0480

Rouleau, Benotto and Copeland JJ.A.

BETWEEN

Lynne Marie Hevey Applicant (Respondent)

and

Charles James Hevey Respondent (Appellant)

Counsel: Robert Haas, for the appellant Aaron Drury, for the respondent

Heard: December 1, 2023

On appeal from the orders of Justice John A. Desotti of the Superior Court of Justice, dated November 29, 2022, with reasons at 2022 ONSC 6685, and January 25, 2023, with reasons at 2023 ONSC 624.

Reasons for Decision

[1] Charles James Hevey appeals the finding of contempt made against him in a family law proceeding. The motion judge found that he violated the terms of two preservation orders. He appeals on the basis that he did not violate the preservation orders. He submits, among other things, that he did not benefit in any way from the impugned transactions and that the value of his assets was not diminished. He also argues that, in any event, the orders lacked clarity. The appellant also seeks to set aside sanctions flowing from the contempt finding contained in the November 29, 2022 order and the January 23, 2023 order.

[2] The appellant is a real estate developer with business interests in Canada and the United States. The first preservation order, dated December 13, 2021, was made on an ex parte basis. It prohibited him from “depleting any of his assets” and from “removing any assets from Ontario.” It also prohibited him from disposing of or transferring the property known as “Tavoid Lands.”

[3] It was alleged by the respondent, the appellant’s former spouse, that after December 13, 2021, the appellant sold a boat slip in Michigan for $149,500 and withdrew money from a company called Manulife in the amount of $685 per month.

[4] The appellant’s evidence was that the boat slip was not owned by him but by a corporation he controlled called Rhemstone Corp. He testified that the proceeds were used to pay off a mortgage, so there was no depletion of the value of the corporation. Likewise, the payment from Manulife was for rent to Tavoid Holdings Inc., and it was used to pay insurance and property taxes. Neither corporation was subject to the December 13, 2021 order.

[5] We agree with the appellant that he did not violate the terms of the December 13, 2021 order.

[6] The purpose of a preservation order is to maintain assets pending a final determination. There was no evidence that the impugned transactions diminished the value of the assets, nor was there evidence that the appellant benefitted personally from the transactions. The trial judge erred when he said at para. 20 of the reasons that the appellant “received the sum of $685.00 from Manulife.” The evidence was that the funds went to Tavoid Holdings Inc. and were used to pay insurance and property taxes.

[7] The second preservation order was on May 10, 2022, which included the following paragraphs relevant to this appeal:

• Para. 1 restrained the appellant from depleting any of his assets until the final disposition of this matter;
• Para. 3 restrained the appellant from removing any of his assets from Ontario (with limited exceptions);
• Para. 6 permitted the appellant to dispose of, encumber, or otherwise deal with the Tavoid Lands or other holdings or assets of Wonderland Commercial Centre Inc. or Tavoid Holdings Inc. if he obtained court approval on 14 days’ notice to the respondent;
• Para. 7 permitted the appellant to continue carrying on business as a land developer and/or consultant, either as an individual, or through a trust or corporation, including by encumbering or charging his assets to obtain financing for the acquisition of lands; and
• Para. 8, “[n]otwithstanding paragraph 6,” required the appellant to report to the respondent “any asset he plans on disposing of,” either as an individual or through a trust or corporation, including any transfers of money for personal or commercial use.

[8] The respondent alleged that the appellant put a mortgage on a business property in Michigan, which violated the May 10, 2022 order. The appellant testified that the mortgage funds were used to discharge a mortgage and to pay contractors, he received no funds personally, and in any event, it was permitted under para. 7 of the order because it was in the ordinary course of business as a land developer.

[9] The motion judge found that para. 8 of the May 10, 2022 order “made it incumbent on the [appellant] to notify the [respondent] or her counsel if any encumbrance was being made against any of his property.”

[10] However, para. 8 referred back to para. 6, the notice clause, and made no reference to para. 7, the clause permitting the appellant to conduct his business, including by encumbering or charging his assets. The appellant testified that he thought that para. 7 allowed him to carry on his business and that para. 8 applied only to para. 6, which referred specifically to Wonderland Commercial Centre Inc. and Tavoid Holdings Inc.

[11] The onus on the party seeking a contempt order is to establish the allegations beyond a reasonable doubt. Civil contempt has three elements that must be established beyond a reasonable doubt: 1) the order alleged to have been breached must “state clearly and unequivocally what should and should not be done”; 2) the party alleged to have breached the order must have had actual knowledge of it; and 3) the party alleged to have breached the order must have intentionally done the prohibited act: Carey v. Laiken, 2015 SCC 17, [2015] 2 S.C.R. 79, at paras. 32-35.

[12] This appeal turns on the first element of Carey, that the order must state clearly and unequivocally what should and should not be done.

[13] We are not satisfied that, in light of the activities permitted by para. 7 and the ambiguity as to the application of para. 8, the order clearly prohibited the mortgage. Further, there is also no evidence that the value of any asset was diminished by the mortgage.

[14] In challenging the sanctions, the appellant raised the issue that para. 12 of the November 29, 2022 order was a sanction and, if the appeal is allowed, both it and the January 25, 2023 sanction should be set aside. During oral submissions, counsel for the respondent agreed.

[15] The appeal is allowed, and the contempt findings and sanctions imposed are set aside. Costs to the appellant fixed in the agreed upon amount of $15,000, inclusive of disbursements and taxes. The costs below that were payable by the appellant are set aside. The costs of the contempt motion below of $7,500 will be reversed so that they are paid to the appellant.

“Paul Rouleau J.A.”

“M.L. Benotto J.A.”

“J. Copeland J.A.”