SUPERIOR COURT OF JUSTICE - ONTARIO
COURT FILE NO.: FC-14-1490-00
DATE: 20151215
RE: SUSAN ANN PRIDHAM, Applicant
AND:
JONATHAN ROBERT PRIDHAM, Respondent
BEFORE: THE HON. MR. JUSTICE J.P.L. McDERMOT
COUNSEL:
D. Macfarlane, for the Applicant
M. Prost, for the Respondent
HEARD: December 10, 2015
ENDORSEMENT
Introduction
[1] This was a motion brought by the Applicant Susan Pridham for a declaration of contempt in respect of a final order made by Quinlan J. on March 16, 2015.
[2] The order in question implemented a final settlement of the financial issues between the parties. That agreement was reflected in Final Minutes of Settlement which were signed by both parties, lastly by the Respondent on February 27, 2015. The purpose of the provisions in issue in this motion was to implement the parties’ property settlement. The order provided that the Respondent was to remove the Applicant from liability under a mortgage, transfer the matrimonial home to the Applicant and make an equalization payment of $108,000. The Respondent has not complied with these provisions. He has not paid the equalization payment. He has not transferred the home and he has not removed the Applicant from the mortgage. He says he cannot raise the necessary funds through refinancing.
[3] The Applicant accordingly requests a declaration of contempt.
[4] The Respondent argues that the clauses in question are a “payment order” and as such cannot be enforced through contempt remedies. As well, the Respondent says that the breaches were not wilful and as such are not subject to contempt of court.
[5] For the reasons set out below, I have determined the following:
a. Other than the paragraph in the order requiring payment of the equalization payment of $108,000, the provisions in issue are not a payment order and may be enforced through contempt.
b. The affidavit evidence of the parties is insufficient to satisfy me beyond a reasonable doubt that there was a wilful and intentional breach of the order. As such a short directed trial on the wilful nature of the contempt shall be scheduled through the trial coordinator.
Background
[6] The Applicant and the Respondent were married on September 1, 1990 and they separated on January 1, 2012. There are two children of the marriage, and both are now over the age of 18 years. Based upon the award of child support in the final order, the youngest child, Erica, remains a dependent and continues to reside with the Applicant.
[7] The order in question was made on March 16, 2015 by Quinlan, J. and was based upon Minutes fully executed by the parties by February 27, 2015. It purports to be a final settlement of all issues arising from the separation of the parties. The pertinent parts of the order read as follows:
All assets and debts will be divided according to the allocation set out in the attached NFP statement.
For the purpose of accomplishing this division of property, on or before March 15, 2015, the Applicant shall transfer to the Respondent all interest in the property at 776 Overhead Bridge Road and the Respondent shall at the time of this transfer deliver to the Applicant evidence that she has been released from all liability for the BMO business line of credit which debt shall be assumed solely by the Respondent.
For the purpose of accomplishing this division of property, on or before March 15, 2015, and simultaneous to the foregoing transfer, the Respondent shall transfer to the Applicant all interest in the property at 156 Goldfinch Crescent, Tiny, Ontario and the Applicant shall at the time of this transfer deliver to the Respondent evidence that he has been released from all liability for the BMO Homeowner line of credit, which debt shall be assumed solely by the Applicant.
The Respondent shall assume sole liability for and indemnify the Applicant with respect to the BMO MasterCard debt and the Hertz/Matthew’s Equipment loan and any other debts associated with his business known as Jonathan’s Contracting and the Respondent shall be solely entitled to all assets of this business free from any claim by the Applicant.
For the purpose of accomplishing this division of property, the Respondent shall forthwith transfer to the Applicant the 2008 Jetta vehicle as a spousal transfer.
In consideration of this division of property, the Respondent will pay to the Applicant an equalization payment of $108,000.00 at the time of the foregoing transfers.
[8] In addition, the Respondent agreed to pay child and spousal support in the amount of $1,733.33 per month. Of that support, $1,000 per month is allocated to spousal support and the remainder child support. The parties agreed that there could be a review of all of the support provisions if the Applicant obtains employment of more than 25 hours per week and in any event on or after January 1, 2016. Mr. Pridham complains that the Applicant now has full time employment and refuses to renegotiate the spousal support under the order.
[9] The Applicant brings this motion because the Respondent has failed to comply with a number of the property division provisions of the order.
[10] Ms. Pridham says that she has done everything that she needs to do to comply with the order. She deposes that, on March 5, 2015, she sent a transfer of 776 Overhead Bridge Road, Penetanguishene, Ontario to be held in escrow pending completion of the transfer of the Goldfinch Crescent property to her and her release from the BMO mortgage. She complains that Mr. Pridham has failed to do the following under the order:
a. Mr. Pridham has failed to obtain a release of the Applicant’s liability on the mortgage on the home to be transferred to Mr. Pridham at 776 Overhead Bridge Road which is a BMO business line of credit to be assumed solely by the Respondent. This is a breach of paragraph 2 of the order;
b. The Respondent has not transferred to the Applicant 165 Goldfinch Crescent, Tiny, Ontario as required under paragraph 3 of the order;
c. Mr. Pridham has not signed over the 2008 Jetta as required by paragraph 5 of the order
d. Mr. Pridham failed to pay the $108,000.00 equalization payment owing under paragraph 6 of the order.
[11] Mr. Pridham acknowledges that he has failed to comply with the order. He says that he was unable to do so because he was unable to obtain financing in order to remove Ms. Pridham from the mortgage, refinance and pay his business debts and pay the equalization payment. He says in his affidavit that he has applied to two different banks, a credit union and for secondary financing through two different mortgage brokers all of whom rejected him. He blames the spousal support payable under the order of $1,000 per month for the failure to obtain financing.
[12] Ms. Pridham responds that the Respondent is attempting to renegotiate the agreement between the parties. Ms. Pridham essentially accuses the Respondent of acting in bad faith and attempting to force her to reduce her spousal support.
[13] Ms. Pridham says that it is impossible for her to comply with the court order without Mr. Pridham’s cooperation and compliance with his removal her liability under the BMO business line of credit. She says that Mr. Pridham is wilfully in breach of the order insofar that he has cash available to him to pay out the BMO business line of credit and the equalization payment. It is her position that Mr. Pridham need not refinance in order to comply with the order and as such there should be a finding of contempt in order to force him to comply with the order.
Analysis
[14] Ms. Macfarlane on behalf of Ms. Pridham asks for a declaration of contempt in respect of the following:
a. She asks for a declaration of contempt in respect of Mr. Pridham’s failure to transfer to the Applicant the property at 165 Goldfinch Crescent in Tiny, Ontario;
b. She requests a declaration of contempt in respect of the Respondent’s failure to deliver evidence to the Applicant that the Applicant has been released from all liability for the BMO business line of credit registered against 776 Overhead Bridge Road in Penetanguishene, Ontario;
c. She requests a declaration of contempt in respect of the failure to transfer the 2008 Jetta vehicle as a spousal transfer; and
d. She requests a declaration of contempt in respect of the failure by the Respondent to pay the equalization payment of $108,000.00.
[15] As set out by C. Lafrenier J. in Bowman v. Bowman, [2009] O.J. No. 2993 (S.C.J.) at para. 17, to make a finding of contempt I must satisfy myself as to three elements of the alleged contempt:
a. The order must be clear and not subject to different interpretation;
b. The acts stated to constitute the contempt must be willful (or at least intentional: see Carey v. Laiken, [2015] S.C.R 79) rather than accidental; and
c. The events of contempt must be proven beyond a reasonable doubt.
[16] Although Mr. Prost suggested that the order was unclear, I cannot see the order being subject to any different interpretation than as suggested by the Applicant. The order is very clear that the properties will be transferred as set out in paragraphs 2 and 5 of the order and that the parties would each obtain a release of liability of each other on the mortgage loans registered against the property being transferred. There is no confusion that the Jetta be transferred to the Applicant. As well there can be no doubt about what is meant by the payment of the equalization payment.
[17] However, it is also well understood that contempt cannot be obtained in respect of “payment order”: see Rule 31(1) of the Family Law Rules[^1] which states that a “payment order” may not be enforced by a contempt motion. Based upon this, the Applicant’s solicitor reluctantly conceded that paragraph 6 of the order which required payment of the equalization payment to the Applicant could not be the basis of a contempt order. And although there is an argument that the general intention of the order must be the lens from which specific clauses are viewed, I cannot enforce payment of the equalization payment through contempt as this is a judgment debt for which there lie the two remedies of writ of execution or garnishment.
[18] However, Mr. Prost also argued that the general intent of the order was to effect payment of the equalization payment and as such none of the provisions in the order were subject to enforcement through contempt as this was, on the whole, a “payment order” within the meaning of the Rule.
[19] Moreover, there is a concern as to whether the breach of the order is wilful or intentional. Mr. Prost argues that the breach of the order was a result of circumstances beyond his client’s control including the inability to obtain financing and the failure of the Applicant to reduce her spousal support as she had obtained employment within the meaning of the order.
a. Are the provisions in respect of which the Respondent is in breach a “payment order” within the meaning of Rule 31?
[20] Orders for payment of money have traditionally been incapable of being enforced through contempt: see Rule 60.11 of the Rules of Civil Procedure[^2] and Rule 31(1) of the Family Law Rules.
[21] There is good reason for this. Debtor’s prison is an institution that is long dead and the present day Rules are designed to prevent any return to anything resembling that archaic institution. As such, it is offensive to law and public policy to obtain contempt remedies, which are quasi-criminal in nature, by reason of the failure of a party to a debt in an order.
[22] A payment order is defined in Rule 2 of the Family Law Rules and the portion of that definition relevant to this motion is as follows:
“Payment order” means a temporary or final order, but not a provincial order, requiring a person to pay money to another person, including,
(a) an order to pay an amount under Part I or II of the Family Law Act or under the corresponding provisions of a predecessor Act,
[23] Mr. Prost argues that the provisions in the order of which his client is in breach of are within the definition of “payment order” under Rules 2 and 31(1) of the Family Law Rules. He states that paragraphs 1 to 6 inclusive of the consent order from March of 2015, read together, are intended to effect the equalization payment that the parties agreed was owing to Ms. Pridham. As such all of the provisions in this order are part of a payment order within the meaning of subparagraph (a) of the definition as the order was intended to effect a payment under Part I of the Family Law Act[^3]. As such, none of the provisions of this order may be enforced through contempt proceedings by reason of Rule 31(1).
[24] He referred me to Rule 25(3) of the Family Law Rules and suggested that Ms. Macfarlane find her remedy there.
[25] Mr. Prost also suggested that, in respect of any order effecting an equalization payment, there were limited circumstances which would permit an order for contempt. He cited as an example the case of Dickie v. Dickie, 2006 576 (ON CA), 2006 CarswellOnt 118 (C.A.). In that case there was an order that the appellant provide an irrevocable letter of credit to secure child and spousal support obligations. The majority decision in the Court of Appeal was that, “an order requiring that security be provided for a court ordered payment is ‘payment order’ and this may not be enforced by contempt”: (para. 57).
[26] However, the important part of this case was the dissent of Laskin J.A. because on appeal the Supreme Court (2007 SCC 8) stated that it was “in substantial agreement with the reasons of Laskin, J.A.” and reinstated the Superior Court’s contempt order.
[27] In his dissent, Laskin, J.A. distinguished between a payment of money to a creditor and payment of money to another party, for example payment into court or to a solicitor for security to secure an order. He stated that if the intention of the order is to provide security, then the order is not a “payment order” incapable of enforcement through a contempt remedy. He cites Colletta v. Colletta, 2003 2412 (ON SC), [2003] O.J. No. 81 (S.C.J.) where J.W. Quinn J. held that the breach of an order to pay the proceeds of the sale of matrimonial home into court could be enforced by contempt order. He saw no meaningful difference between an order to pay money into court and an order such as in Dickie to pay money or security to a solicitor in trust.
[28] According to Laskin J.A., the court must determine the intent of the order to determine whether this is a “payment order” or some other type of order capable of enforcement through contempt proceedings. If an order creates a debt, then it is not capable of enforcement through contempt; if it creates some other obligation, such as an obligation to provide security, it is: see para. 105 of Laskin J.A.’s judgment.
[29] As mentioned above, one provision of this order is clearly a “payment order” as it requires the Respondent to pay the Applicant a $108,000.00 equalization payment. That is a provision that is capable of enforcement only through Rule 25(3) which would include the right to obtain a writ of execution or garnishment. That point was conceded during argument by Ms. Macfarlane.
[30] However the remaining portions of the order are in my view not a payment order for a number of reasons.
[31] Firstly, we need to look at the intent of the order of Quinlan, J. made March 16, 2015. Firstly the order does not require payment of money other than the $108,000.00 set out in paragraph 6 of the order. The intent of this portion of the order is explained in paragraph 1 of the order which states that “All assets and debts will be divided according to the allocation set out in the attached NFP statement.” Paragraphs 2 and 3, the paragraphs requiring the transfers of the two homes and the release of liability on the mortgages both state that they are “for the purpose of accomplishing this division of property.” The clause respecting the transfer of the Jetta has a similar stated purpose. The NFP statement placed the two residences on the side of the ledger for the party to whom the order required them to be transferred even though jointly owned. It put the Jetta on the Applicant’s side of the ledger. It also placed the debts to be assumed by each party on that parties’ side of the ledger even though these loans were also joint.
[32] The intent of this order was not for payment of funds from one party to another under the Family Law Act but to effect a division of property as reflected in the NFP statement. As such the clauses in question, other than the clause requiring payment of the equalization payment itself, are not “payment orders” and as such are not excluded from a contempt order by Rule 31(1). The intention of the order was to divide up assets and liabilities and not secure payment of funds. These paragraphs create an obligation to do something, rather than to create a debt.
[33] Moreover, to give the Respondent the interpretation he desires would be to effectively deprive the Applicant of a remedy to enforce the property and debt provisions in the court order. When questioned about Rule 25(3), Mr. Prost could think of no remedy available to the Applicant to force compliance with the ordered transfers of properties and assumption of the mortgages outside of the contempt order being sought by the Applicant. Mr. Prost suggested that the realistic remedy was to renegotiate the order, or force the sale of the assets and distribute the funds accordingly and discharge the debts. That was not the intent of the parties, who wished to divide the assets and debts according to the NFP statement.
[34] If parties have agreed to a solution to their litigation and reduce it to a court order, it goes without saying that a court should be able to enforce, if at all possible, its own order. To do otherwise would have the effect of depriving parties of the ability to arrange their own affairs by way of a settlement such as in the present case, which involves a transfer of property. When parties have agreed to reduce their agreement to a court order, it is in the interests of justice that they be later permitted to enforce their agreement in the event of a breach, unless that agreement and order is offensive to public policy or specifically unenforceable at law. To adopt Mr. Prost’s approach would then result in parties not being able to agree to a transfer of properties and allocation of debts to achieve a just result, an arrangement expressly permitted under s. 9(1) of the Family Law Act.
[35] As well, when parties consent to an order they presumably have done their homework. And when one party agrees to do something which becomes court ordered, the other party is entitled to assume that the other party has the ability to meet his or her obligations unless there is a condition in the order, such as the need to obtain satisfactory financing.
[36] For these reasons, I find that paragraphs 2, 3 and 5 of the order are not payment orders within the meaning of Rules 2 and 31(1) of the Family Law Rules and as such are capable of enforcement in this motion for contempt.
b. Is the breach of the orders a willful or intentional breach by the Respondent?
[37] The Respondent in this matter states that in effect the order was frustrated by his inability to refinance the BMO business line of credit so that the Applicant could be removed from that debt and the equalization payment made.
[38] Mr. Prost also notes that his client is now entitled to a review of support because the Applicant has employment that is more than 25 hours per week and because of her failure to renegotiate support she does not have “clean hands”. As such, she should not be permitted to enforce the order.
[39] The Applicant argues that the evidence is clear that this is not the case. Ms. Macfarlane points out that the Respondent had some $277,000.00 in investments and in cash on the date of separation and there is no reason to believe that he does not presently have that amount to pay those funds toward the BMO line of credit and the equalization payment. She notes that the Respondent did not provide rejection letters from the rejecting banks, credit union and mortgage brokers other than one rejection letter from a bank that was barely comprehensible. She also says that the Respondent was attempting throughout to reduce the spousal support payment and appears to be acting in bad faith. Regarding the issue of clean hands, she says that her client is still within a probationary period in her new employment and it would therefore be premature to renegotiate spousal or child support.
[40] I have never heard of contempt being an equitable remedy requiring clean hands. In any event, as noted above, contempt is a quasi-criminal remedy which must be proved beyond a reasonable doubt. The onus on the moving party for contempt is a high one and any doubt must be exercised in favour of the person alleged to be in breach of the order: see Prescott Russell Services for Children and Adults v. G.(N.) (2006) 2006 81792 (ON CA), 82 O.R. (3d) 686 (C.A.), Hefkey v. Hefkey, 2013 ONCA 44 and Children’s Aid Society of Ottawa v. S.(D.), 2001 28152 (ON SC), [2001] O.J. No. 4585 (S.C.J.).
[41] The quasi-criminal aspect of a contempt order is confirmed by the criminal nature of the remedy. Contempt is not only for the purpose of enforcing an order; it is also intended to punish an individual who breaches a court order. This can be achieved through fine or imprisonment. Once the court finds contempt, there is a penalty hearing similar to a criminal sentencing hearing. As such, the criminal standard of proof places a high onus on the moving party.
[42] For a finding of contempt, there must be some element of intent by the Respondent to breach the court order: see Carey v. Laiken, supra. It is clear that an accidental breach will not support a finding of contempt. It may as well be the case that a breach of the order resulting from circumstances beyond the Respondent’s control will also not support a finding of contempt. It is unclear to me from the material filed as to whether the breach was intentional or wilful as it is unclear as to what the Respondent’s assets are today, and as to the real reasons as to the inability of the Respondent to refinance. Also, neither party’s material addressed in any meaningful fashion the failure to transfer the Jetta.
[43] As such, it is my view that there must be an oral hearing in order to determine whether the breach of the order in this matter was wilful and intentional or not. The Applicant states that the Respondent had sufficient liquid assets to satisfy the order; this issue should be fleshed out in a hearing where there is viva voce evidence and cross-examination.
[44] I note that, as in criminal matters, a party is presumed to have intended the actions that he or she took. In the present case, the Respondent acknowledges that he is in breach of the order to transfer properties and remove the Applicant from the debt. The Applicant does not have to prove intent. As such, it is the Respondent’s task to prove that the non-compliance occurred because of circumstances beyond his control, or alternatively, by reason of the Applicant’s breach of the support review clauses in the order. Therefore, the Respondent must first lead evidence in the trial as to his reasons as to why he is in non-compliance with the order; after that the Applicant shall have a right of reply.
[45] Accordingly the issue of the wilfulness of the breach must be submitted to a focused trial before me. That trial should be no longer than one day in length, on a date to be set by the trial co-ordinator. The order of presentation of evidence is the Respondent and then the Applicant in reply. The evidence in chief of each of the witnesses shall be contained in part in the affidavits submitted in support of this motion, but either party may lead further evidence in chief.
[46] Costs of this motion shall be reserved to completion of the focused trial and my ultimate determination of the issue of contempt.
McDERMOT J.
Date: December 15, 2015
[^1]: O. Reg. 114/99
[^2]: R.R.O. 1990, Reg. 194
[^3]: R.S.O. 1990, c. F.3