Court File and Parties

COURT FILE NO.: FS-21-44606 DATE: 2024-04-05 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Daniel Brian Thwaits, Applicant AND: Ava Kim Thwaits, Respondent

BEFORE: Justice Mills

COUNSEL: Nasar Iqbal, Agent for the Applicant Amir Abbasi, Counsel for the Respondent

HEARD: December 8, 2023

Reasons for Decision

[1] By Order dated August 2, 2023, the Respondent was found to be in contempt of court for deliberately breaching an interim preservation and non-dissipation order, issued on consent of both parties on April 7, 2022 (the “Preservation Order”). Ms. Thwaits was provided four months to undertake meaningful efforts to purge her contempt. She failed to do so, and a sentencing hearing was conducted on December 8, 2023, with Ms. Thwaits giving oral evidence. Written closing submissions were subsequently provided by counsel.

[2] The foundation of Ms. Thwaits’ contempt lies with obtaining two mortgages against one of the properties subject to the Preservation Order and then transferring $180,000 from those proceeds to her mother in Korea, and with transferring ownership of another property subject to the Preservation Order to her now deceased sister. Evidently, Ms. Thwaits’ mother refuses to return the funds and the property now registered in the sister’s name is essentially frozen as Ms. Thwaits advises there has been no steps taken to commence a formal administration of her sister’s testamentary estate. Ms. Thwaits has very effectively put significant assets beyond the reach of Mr. Thwaits by deliberately breaching a court order made on consent and by then failing to take any meaningful steps to purge her contempt.

[3] As noted in my Endorsement of August 2, 2023, the conduct was flagrant and deliberate. This is an aggravating factor and calls for significant censure by this Court. The fact Ms. Thwaits readily admitted breaching the Preservation Order is a mitigating factor.

[4] One of the core purposes of a finding of civil contempt is to coerce compliance with orders of the Court. TG Industries Ltd. v. Williams, 2001 NSCA 105 Another is to ensure the administration of justice is not brought into disrepute. Itrade Finance Inc. v. Webworx Inc. Those who flout court orders must not benefit from their actions.

[5] Rule 31(5) of the Family Law Rules outlines the various sanctions available for addressing a finding of contempt. They include imprisonment, the issuance of a fine, requiring payment of a penalty to the other party, to do anything else that the court decides is appropriate or not do anything the court forbids.

[6] The sentence imposed should be restorative to the victim of the contempt and punitive to the contemnor. Deterrence and denunciation are important objectives in sentencing. A sentence must correlate to the conduct that produced the contempt and it must not reflect a marked departure from sentences imposed in like circumstances. Aggravating and mitigating factors must be considered to result in a sentence that is proportionate to the breach. If a penalty is to be imposed, the purpose is to punish the contemnor, not to compensate the wronged party. Kronberger v. Kudrocova, 2023 ONSC 2326 at paras. 44-49

[7] A fine or penalty may be substantial, provided it is reasonable and proportionate to the nature of the contempt and has considered the aggravating and mitigating circumstances. In family law matters, the best interests of the children must also be a consideration. LeGrand v. LeGrand, 2024 ONSC 693 (ONSC(DC)) at paras. 65 - 67

[8] Having regard to the facts, all of which have been admitted by Ms. Thwaits, she knowingly and deliberately breached the Preservation Order. She stated that she felt a moral compulsion to do so as she owed money to her mother. The transfer of the property to her sister was necessary due to practical considerations. Ms. Thwaits had a poor credit rating and was unable to obtain refinancing for the property, the ownership of which was registered as tenants in common in the names of Ms. Thwaits for 1% and her sister for 99%. She states there was no harm done as Mr. Thwaits had no financial interest in these properties. That may be the case, however the ultimate financial interest in these assets is a judicial determination to be made in the family law proceedings. It does not justify nor does it diminish the culpability of her conduct.

[9] In her sentencing submissions, Ms. Thwaits seeks a pardon and a verbal admonition to address the contempt. She submits this is an appropriate sentence because she has never previously defied a court order, she has never before been convicted of contempt, she admitted the breach and apologized for it, and she has children who depend upon her. These are indeed mitigating factors in this case.

[10] Ms. Thwaits claims to have made her best efforts to purge the contempt. I do not accept this submission. Simply making a request of her mother to return the $180,000 does not constitute “best efforts”. Seeking leave to sell the other properties subject to the Preservation Order so that she may raise additional funds was not a sincere effort to purge her contempt. It was merely an attempt to further subvert the protective measures of the Preservation Order.

[11] The fact there were two breaches of the Preservation Order and that Ms. Thwaits benefitted financially from the contempt are aggravating factors. The breaches allowed her to settle a financial debt she allegedly had with her mother and to gift a condominium property to her sister. In both cases, the benefit from the contempt was provided to a direct family member. The first breach was within 3 months of the Preservation Order having been made. As she was represented by legal counsel at the time of the order, and as it was made on consent, Ms. Thwaits is deemed to have had full knowledge and understanding of her obligations under the Preservation Order. She continued to be represented by counsel when she decided to unilaterally act in breach of the order. She failed to disclose her breach, only admitting it after her conduct had been discovered by Mr. Thwaits. She knew she was acting in breach of the Preservation Order but justifies her actions by asserting that Mr. Thwaits had “dissociated himself” from the properties and therefore he was not entitled to any of the proceeds. These are all aggravating factors.

[12] It is unknown at this time whether Mr. Thwaits will be entitled to an equalization payment from Ms. Thwaits. The family law proceeding continues. All the properties subject to the Preservation Order have been sold, transferred, or forfeited as a result of Ms. Thwaits conduct. These properties were to be preserved in the event Mr. Thwaits was entitled to an equalization payment. The allegations are that Ms. Thwaits used proceeds from the sale of the matrimonial home to purchase the properties. While not on title to any of the properties, Mr. Thwaits may have a viable trust claim to assert. Alternatively, the sale proceeds could have been utilized to satisfy any financial payment that may be found to be owing from Ms. Thwaits to Mr. Thwaits. The entire purpose for obtaining the Preservation Order has been undermined by the contemptuous actions of Ms. Thwaits.

[13] Ms. Thwaits operates a hairstyling salon. She submits she has limited financial resources to satisfy any fine or penalty. She has offered to pay a maximum fine of $10,000 at $200 per month. The payment of such a modest fine would not be restorative to Mr. Thwaits. Imposing a significant penalty payable to Mr. Thwaits may not be appropriate, particularly if it is ultimately determined that he is not entitled to an equalization payment from Ms. Thwaits. It is to be remembered that the purpose of a penalty is not to compensate the wronged party but rather to punish the wrongdoer. Kronberger v. Kudrocova, supra at para. 49

[14] Having given much consideration to the appropriate sentence in this matter, Ms. Thwaits is ordered to pay $180,000 into Court, to be held pending a final resolution of the family law proceeding. This will give effect to the intent of the Preservation Order, and it will be restorative to Mr. Thwaits. Ms. Thwaits shall have until May 1, 2024 to pay these funds into Court failing which a custodial sentence shall be imposed to demonstrate the Court’s denunciation of Ms. Thwaits’ conduct and to ensure the administration of justice is not brought into disrepute. In my view, a fit and proper sentence is 15 days incarceration. I note that Ms. Thwaits has primary care of the children, however Mr. Thwaits has advised he is available to care for the children as required.

[15] To be clear, if Ms. Thwaits deposits $180,000 with the Court on or before May 1, 2024, she may avoid serving a custodial sentence. If she fails or elects not to deposit these funds with the Court as directed, she shall return to this Court on May 13, 2024, at 9:00 a.m. so that she may be taken into custody and commence serving the custodial sentence. Ms. Thwaits shall be returned to this Court upon completion of the custodial sentence. As this custodial sentence is in respect of a finding of civil contempt, the principle of earned remission does not apply and therefore, the full 15 day sentence shall be served.

[16] Ms. Thwaits admitted to transferring property in Korea to her mother for no consideration in March 2023, after the motion for contempt was served. She had not previously disclosed this property in her Financial Statement filed with the Court. Mr. Thwaits seeks complete financial disclosure related to this property. It is so ordered and shall be delivered within 10 days.

Justice J. E. Mills Date: April 8, 2024