Dumont v. Lucescu, 2016 ONSC 1042

CITATION: Dumont v. Lucescu, 2016 ONSC 1042

NEWMARKET COURT FILE NO.: FC-13-043048-00

DATE: 20160210

SUPERIOR COURT OF JUSTICE – ONTARIO

RE: Mireille Dumont, Applicant and Steve Lucescu, Respondent

BEFORE: The Honourable Mr. Justice P.W. Sutherland

COUNSEL: Patrick D. Schmidt and Melanie Larock, for the Applicant Daryl Gelgoot and David Frenkel, for the Respondent

HEARD: January 15, 2016

ENDORSEMENT on contempt motion and strike pleading

[1] On August 11, 2015, I heard the Applicant’s and Respondent’s motions for contempt. In my decision of October 20, 2015 (the “Decision”), I found that the Respondent was in contempt and in breach of various court orders. I also provided the Respondent with forty-five days to purge his contempt and rectify his failure to comply with court orders.

[2] On January 15, 2016, I heard the “penalty” version flowing from my Decision on October 20, 2015.

Brief Update

[3] Since the hearing on August 11, 2015 and the release of my Decision on October 20, 2015, there have been various factual updates.

[4] The Respondent has obtained new counsel.

[5] The Respondent has appealed my decision on the basis of incompetent representation by previous counsel. Chief Justice Strathy, on December 11, 2015, ordered that the Respondent has until February 29, 2016 to perfect his appeal and Justice Benotto has been assigned as case management judge.

[6] The Respondent, through his new counsel, has provided most of the disclosure ordered by this court in letters dated November 19, 2015, November 27, 2015, and December 2, 2015.

[7] On December 10, 2015, counsel for the Applicant sent a schedule setting out disclosures the Applicant states have not yet been answered.

[8] Prior to obtaining new counsel but during the time the Respondent was represented by previous counsel and after the hearing of the motions in front of me on August 11, 2015, the Respondent withdrew monies from the net proceeds of sale of the Dunkirk property. The particulars of the net proceeds of sale of the Dunkirk property was not provided by the Respondent at the time of the hearing on August 11, 2015, or at the time of my Decision. Due to my order that disclosure of the net proceeds of sale had to be provided, it was discovered that:

(a) On September 19, 2014, the Respondent transferred $25,000 to his present wife, Nahanni Johnstone.

(b) On December 19, 2014, the Respondent transferred $20,000 to Watchfinder.

(c) On December 19, 2014, the Respondent transferred $25,000 to his previous counsel.

(d) On September 24, 2015, the Respondent transferred $53,192.95 to Ms. Johnstone.

(e) The total of monies removed from the net proceeds of sale is $123,192.95.

[9] A Writ of Execution (the “Writ”) has been registered against the Respondent by RBC. The amount set out in the Writ is $294,555.18 with interest accumulating at the rate of 21% from January 12, 2004. This Writ was renewed on December 16, 2009.

[10] A proceeding against the Applicant and the Respondent took place in Sudbury. In that proceeding, judgment was awarded in favour of BMO against the Respondent. In that judgment, the Respondent was ordered to pay:

(a) The sum of $105,989.72 with interest.

(b) The sum of $246,651.34 with interest.

(c) Costs in the amount of $18,009.90.

[11] A further order was made by Cornell J. on October 2, 2015, against the Respondent in favour of the Applicant in the amount of $8,500. Cornell J. also ordered that the Applicant can seek costs against the Respondent in defending the action brought by BMO in this proceeding, for failure to keep the mortgage in good standing.

[12] As of January 5, 2016, the Respondent is in arrears of support in the amount of $49,094.07.The Applicant and Respondent’s former primary residence, 163 Old Humber Crescent, Kleinburg, Ontario (“Old Humber”), has been sold and the closing is scheduled to take place in mid-February 2016. It is anticipated that the net proceeds of sale will be $1.8 million dollars.

Position of the Applicant

[13] The Applicant concedes that the Respondent has provided most of the disclosure ordered but argues that he has not provided all the disclosure. Specifically, the Applicant submits that the Respondent has failed to comply with:

(a) Paragraph 39(b)(ii) of the Decision, in that the Respondent has failed to provide:

(i) An accounting of all taxable monies by the Respondent from January 1, 2013 to October 20, 2015;

(ii) Records of all paid for work assignments for any entity providing the Respondent’s services such as Zero Hour Industries, Advances Cinemographic Technologies LLC, Rat Holdings and/or ESM Home Entertainment Limited, or any other corporations owned by him in whole or in part domiciled in the USA for the period from January 1, 2013 to October 20, 2015; and

(iii) Notices of Assessment for Zero Hour Industries for 2011 and 2012.

(b) Paragraph 39(b)(iv) of the Decision. The Respondent has not provided any viable plan to make payments towards the support awards and cost awards owed to the Applicant.

(c) Paragraph 39(b)(v) of the Decision. The Respondent has not provided a plan to comply with the City of Vaughan by law issue on Old Humber.

[14] The Applicant submits that the Respondent, knowing very well after the hearing in August 2015 that he was not to transfer funds from the net proceeds of sale of the Dunkirk property, withdrew over $53,000 and gave the funds to his wife, Nahanni Johnstone.

[15] The Applicant further submits that the balance owing under the Writ of RBC is approximately $2,947,744.85. The Respondent now has two writs against him in favour of RBC and BMO.

[16] The Applicant, therefore, submits that the Respondent has not purged his contempt in not complying fully with the orders of this court and is further in contempt, as evidenced by his transferring of the monies after the hearing in August 2015.

[17] The Applicant urges this court to impose a fine of $25,000 upon the Respondent for his contempt and to strike his pleading, except for any claim for custody and access.

[18] The Applicant further submits that if the court is not inclined to strike the Respondent’s answer then this court should not entertain any motion brought, or to be brought, by the Respondent until he fully complies with the orders.

Position of the Respondent

[19] The Respondent submits that he has complied with all the disclosure orders as best that he can, at this moment. He submits that:

(a) He has provided records for all his non-taxable income for the period January 1, 2013 to October 20, 2015 by producing his records of all money that he has received from AFBS and SAG Pension and Health Plans. He submits that these two entities record all his income. Further, he submits that he has not worked since January 1, 2013 to present and, as such, there is nothing to track by AFBS and SAG Pension and Health Plans.

(b) A record for all paid work assignments for the period January 1, 2013 to October 20, 2015, is not available. As he has previously stated, he has not worked. Any income he may have goes through the two entities indicated above. He does not keep any records of his work assignments and he relies on the records provided by AFBS and SAG Pension and Health Plans.

(c) The Notice of Assessments for Zero Hero Industries for 2011 and 2012, the Respondent agrees that the Notice of Assessments have not been provided. However, he states, his accountant Brian Borts, confirmed that CRA accepted the tax filings on November 23, 2015 and it will take approximately eight to twelve weeks to process.

(d) On a plan to pay the outstanding cost awards, the Respondent indicates that he has consented and will continue to consent that the monies owed can be taken from his share of the net proceeds of sale of the Old Humber property.

(e) On the bylaw issue with the City of Vaughan, it is no longer an issue given that Old Humber property has been sold. Once the property closes, it will be the responsibly of the new owners. He also states that a letter from the Bylaw Enforcement Department of the City of Vaughan, dated November 27, 2015, verifies that there are no outstanding orders or Bylaw infractions.

[20] The Respondent submits that he has had to borrow money to pay $5,000 per month for the months October, November, and December 2015, and, January 2016. Thus, he submits he has paid $20,000 towards the ongoing support order.

[21] The Respondent states that the Writ of RBC is only in the amount of $53,727.71. He believes that this amount likely represents the extra fees that RBC incurred with respect to the power of sale, such as, appraisal fess, legal fees, maintenance fees, and maintenance costs.

[22] The Respondent’s counsel forcefully argues that the Respondent did not receive effective representation from his previous counsel. Most of the ordered financial disclosure was provided to the Respondent's previous counsel and for some unknown reason, it was not provided to the Applicant.

[23] The Respondent had to obtain an order of this court to have his previous counsel release the file. This order was obtained by Jarvis J. on November 10, 2015. The file was delivered to his new counsel on November 11, 2015 at 4:40 p.m. The volumes of the continuing record were provided but significant portions of the file were missing. In order to obtain the material filed on the contempt motion and a complete continuing record, the Respondent’s counsel had to attend and photocopy portions of the continuing record from the Applicant’s counsel.

[24] The Respondent submits that there are numerous occasions that the conduct of his previous counsel was prejudicial to his case. In his affidavit, the Respondent sets out, in length, the conduct of previous counsel and his previous counsel’s failure to act diligently or at all, on behalf of the Respondent. The Respondent alleges that he was either not made aware of the court orders and their meanings, and/or was given negligent legal advice by his previous counsel.

Contempt

Legal Principles

[25] Rule 31(5) of the Family Law Rules[^1] provides the court with authority to make order against a person the court has found in contempt. The orders range from imprisonment, a fine, pay an amount to a party as a penalty, and anything else the court decides appropriate.

[26] The court has a wide discretion when it comes to determining a sentence for contempt and the list set out in Rule 31(5) in not a closed list.[^2]

[27] Justice Quigley in Szyngiel v. Rintoul determined that the sentencing in a contempt proceeding, particularly in family law proceedings, should be comprised of two components. The components are a restorative to the victim of the contempt, and a punitive component to the contemnor.[^3]

[28] A purpose of sentencing in contempt is that of deterrence. The deterrence is both general and specific. The punishment for contempt should serve as a disincentive to those who might believe that a breach of a court order has no significance and specific to the contemptor for breaching court orders. The sentence usually must be more than the purging of the contempt.[^4]

[29] The purging of contempt does not go to the contempt but to the sentence.[^5]

[30] Courts have ordered various sentences against contemptors. Courts have ordered fines to be paid. Courts have ordered the contemptor to pay a penalty to the innocent party. Courts have ordered that the contemptor pay costs to the innocent party. These fines and penalties have ranged from $25,000 to $75,000 along with a penalty for each month in default.[^6]

[31] Courts have also found that the purging of the contempt is a sufficient penalty.[^7]

Analysis

[32] Having reviewed the material filed by both parties, I do find that the Respondent has significantly complied with the orders for disclosure. He has not fully complied but the answers which he has not provided are not that significant to find that he has not gone a long way to comply with the disclosure orders.

[33] The Respondent, however, has not helped himself with transfers of monies from the net proceeds of sale of the Dunkirk property. It simply astonishes me that after the hearing in August 2015, the Respondent transferred over $53,000 to his wife.

[34] I am aware of the submission of counsel for the Respondent that it was his previous counsel that led him down this path of noncompliance.

[35] However, I do not accept that submission entirely. The Respondent was in court at the hearing on August 11, 2015. He heard the comments from this court on the sale of the Dunkirk property without a court order or consent of the Applicant. Witnessing the comments made at the hearing, the Respondent still transferred the funds. I should also note that this transfer of funds was not revealed until the Respondent’s new counsel provided the ordered disclosure to the Applicant’s counsel in November/December 2015.

[36] The Respondent’s behavior has forced the Applicant to incur more costs and to endure motion after motion. The Applicant has had to see this proceeding stalled for months and not move forward to resolution or adjudication due to the actions of the Respondent.

[37] As Backhouse J. stated in Belittchenko:

The wife has been under great stress as a result of the husband’s contempt. There is no doubt that the husband’s actions have been calculated to prejudice and wear her down. The husband knew that she would be forced to hire a lawyer in Russia and incur legal costs there at the same time that she was under financial strain of incurring large legal and accounting fees in this jurisdiction. [^8]

[38] Backhouse J. then ordered a penalty of $50,000 payable to the wife “for the stress, anxiety and trouble his contempt has caused her.”[^9]

[39] The Applicant is not seeking incarceration. She is requesting the court impose a fine in the amount of $25,000 upon the Respondent.

[40] Though I appreciate that a party must obtain legal advice, the final decision does lie with the Respondent. An aggravating factor, for this court, is the transfer of money after the hearing of August 11, 2015.

[41] Since the retaining of new counsel, the Respondent has made significant efforts to comply with the orders. But having said that, he has not repaid the monies that he knew he should not have withdrawn in September 2015. His response, as provided to me by his counsel in submissions is that: “My then counsel said the withdrawal was not a problem as long as half of the next proceeds remain.” I do not accept this explanation knowing what was said at the hearing.

[42] In deciding on an appropriate sentence, I am cognizant of the two components: restorative and punitive. Deterrence, both general and specific, needs to be made in the circumstances of this case. The Respondent simply had too many chances to comply and simply ignored those opportunities to do so.

[43] I therefore find a penalty and fine is appropriate in these circumstances. I order the Respondent to pay a fine of $10,000, and a penalty to the Applicant for “the stress, anxiety and trouble that his contempt has caused” in the amount $5,000. The Respondent has thirty days to pay the penalty and sixty days to pay the fine. If he fails to pay either the penalty or fine, the Applicant is at liberty to bring a motion to deal with his failure in paying either the fine and/or penalty.

Strike of Pleading

Legal Principles

[44] Rule 1(8) of the Family Law Rules provides the court with authority in family law cases to make various orders to deal with a party’s failure to obey a court order. In that Rule, one of the enumerated remedies is the striking of the answer.

[45] Section 24 of the Child Support Guidelines[^10] also provides the court with the authority to “strike out any of the parent’s or spouse’s pleadings” for failures to comply with an order for financial disclosure of income information.

Analysis

[46] As I stated in my Decision, a court order is not a suggestion. A party cannot decide what order he or she wishes agrees in order to comply with that order. The consequence for repeated failure to comply with a court order must be severe with significant consequences.

[47] I am satisfied that the Respondent now clearly understands that his failure to comply with court orders has severe consequences.

[48] The Applicant submits that his failure to pay the arrears of support and the cost awards should result in his answer being struck. However, the Respondent has offered to pay all arrears in support and all outstanding cost awards from his share in the net proceeds of Old Humber. The Applicant has refused to accept this offer on the basis that she is not satisfied that the Respondent does not have the resources to pay these amounts and does not wish to deplete the security of the net proceeds of sale. Though I can understand the Applicant’s resistance, given the behaviour of the Respondent, the fact still remains that there may be a sizeable amount of monies from the sale of Old Humber which the Applicant can utilize to relieve some of her costs and financial hardship due to not receiving support on a timely basis. Further, this payment can be on the condition that if it is determined that the Respondent did have the financial assets, the payments made from the net proceeds can be ordered to be paid back.

[49] Thus, the Respondent has put forth a proposal to pay the arrears in support and the outstanding cost awards. Based on the Respondent’s behaviour since retaining new counsel in providing the disclosure, and the Respondent’s proposal to pay as outlined above, I do not believe that it would be appropriate to strike his answer. Such an order should only be made in the clearest and rarest cases. At this present time, this is not one of those cases.

Disposition

[50] I order that:

(a) The Respondent, Steve Lucescu, shall pay to the Applicant, Mireille Dumont, the sum of $5,000 as a penalty, in thirty days.

(b) The Respondent, Steve Lucescu to pay a fine in the amount of $10,000, in sixty days.

(c) If he fails to pay either the penalty and/or the fine as outlined in paragraphs (a) and (b) above, the Applicant is at liberty to bring a motion to deal with the Respondent’s failure to pay.

(d) The Respondent to provide the Notice of Assessments for Zero Hero Industries for 2011 and 2012 within ten calendar days after receipt.

(e) If the parties cannot agree on the payment proposal put forth by the Respondent, I will hear submissions on that point by conference call to be set up through my judicial assistant.

(f) Once the Respondent has paid the penalty, the outstanding cost awards and arrears in support, the Respondent is at liberty to book a case conference to deal with child and spousal support.

Costs

[51] If the parties cannot agree on costs, the Applicant to serve and file her submissions of costs within twenty-one days from the date of this decision, and the Respondent will have fourteen days thereafter to serve and file his submissions. The submission to be no more than three pages, double spaced, exclusive of any cost outline, case law and offers to settle. Submissions are to be filed with the court. If no submissions are received within the time period set out herein, an order will be made that there will be no costs.

Justice P.W. Sutherland

Released: February 10, 2016

[^1]: O. Reg. 114/99 [^2]: Geremia v. Harb, 2007 Carswell 4956 (SCJ) [^3]: 2014 ONSC 3298 (SCJ), at para [26] [^4]: Geremia v. Harb, supra [^5]: Van De Mierden v. VanDeMierden, [2009] O.J. 2865 [^6]: Belittchenko v. Belittchenko, 2007 CanLII 20673 (ON SC), [2006] O.J. No 5493; affirmed 2006 CanLII 33302 (OCA); DeMarco v. DeMarco, unreported, Court File No. 06-FD-320541; Taylor v. Taylor, 2005 CanLII 63820 (ON SC), [2005] O.J. No 4593; Bowman v. Bowman, [2009] O.J. 2993; Brar v. Dhinsa, 2008 CarswellOnt 1874. [^7]: Szybghiel v. Rinoul, supra [^8]: Supra, para 40 [^9]: Supra, para 41 [^10]: O. Reg. 391/97