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Contempt - Penalty (2). Castillo v. Xela Enterprises Ltd.
In Castillo v. Xela Enterprises Ltd. (Ont CA, 2024) the Court of Appeal considered an issue of sentencing on a contempt finding, starting with a review of the trial judge's reasoning:[35] Rule 60.11(5) of the Rules of Civil Procedure, R.S.O. 1990, c. C.43. sets out the orders available for a finding of civil contempt, including a term of imprisonment, a fine, a compulsory order, and the payment of costs. The motion judge discussed the purposes of sentencing for civil contempt, which she stated were primarily coercion and enforcement of the rights of a private party, but also include punishment in order to foster respect for the court and its process. For civil contempt, a sentence of imprisonment is rare and reserved as a last resort.
[36] The motion judge then considered six factors from the two leading cases of Boily v. Carleton Condominium Corporation 145, 2014 ONCA 574, 121 O.R. (3d) 670 and Business Development Bank of Canada v. Cavalon Inc., 2017 ONCA 663, 416 D.L.R. (4th) 269: proportionality, mitigating and aggravating factors, deterrence and denunciation, similar sentences in like circumstances and the reasonableness of a fine or incarceration.
[37] The motion judge found the appellant’s wrongdoing to be extremely serious: the Receiver was an appointed officer of the court. In the face of the Appointment Order that gave the Receiver exclusive authority over Xela, the appellant interfered with the Receiver’s actions and powers and participated in a criminal complaint against its representatives in Panama. The sentence had to reflect the severity of the appellant’s conduct.
[38] The only mitigating factor was that this was a first offence. The appellant had not purged his contempt, apologized, or expressed any remorse.
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[44] The motion judge found several aggravating factors. The contemptuous conduct was “blatant, deliberate, wilful and unrepentant”, “not misguided or accidental.”
[45] In addition, the appellant’s conduct over two years as the events were unfolding demonstrated “an astounding lack of respect for this court.” He gave the declaration after the Appointment Order and after the Gabinvest Resolution was confirmed by the court. After being ordered to withdraw the Declaration and take all steps to withdraw the Criminal Complaint, he attended the interview without seeking the direction of the court. At the interview, he did not say that he had withdrawn the Declaration and that he did not want to pursue the Criminal Complaint. Instead, he stood by his position. In the words of the motion judge:According to the summary of the Interview, he told the Public Prosecutor that this case involves a “company that I manage in Canada” and described Xela as “a company I represent” (contrary to the exclusive authority given to the Receiver under the Appointment Order). He described himself as “a victim and plaintiff”. He said that “a commercial judge in the province of Ontario issued an order limiting me from participating or carrying out further proceedings in this case, which makes me feel like a judicial hostage”. He did not forthwith take any and all further steps within his control to effect the withdrawal of the Criminal Complaint and the Declaration as ordered by McEwen J. on February 10, 2021. [46] The final aggravating factor was personal financial benefit from the contemptuous conduct: in making the Declaration, the appellant interfered with the Receiver’s mandate to assist in enforcing the Castillo judgment against Xela, his family’s holding company.
[47] To arrive at the sentence, the motion judge referred to the case law that holds that deterrence and denunciation are the most important sentencing objectives in civil contempt cases, including two similar cases where jail sentences of six months were imposed: Sussex Group Ltd. v. Fangeat (2003), C.P.C. (5th) 274 (S.C.); Central 1 Credit Union v. UM Financial Inc., 2012 ONSC 889, 89 C.B.R. (5th) 91. She found that both specific and general deterrence were needed in this case for the appellant and others to know that they must respect the court and the Receiver appointed by the court.
[48] Further, neither a fine nor a period of probation would serve the principles of sentencing in this case because they would not address the seriousness of the appellant’s conduct or be effective as a deterrent.
[49] The motion judge concluded that only a sentence of incarceration would meet the applicable principles, and found that 30 days would be sufficient but not excessive.
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Analysis
[86] Our courts and the rule of law are sacrosanct in this country, recognized and revered as an essential component of our democracy. Our judges are held in high regard as the custodians of the rule of law and of the fairness of the judicial process. To preserve the sanctity of the judicial system, it is understood and accepted that court orders must be followed and obeyed, with significant consequences for those who fail to do so.
[87] Everyone who participates in the legal system expects and assumes that if they are successful, and the court makes an order in their favour, it will be obeyed by the other party. If it is not, the winner will cry foul. The obvious corollary is that if an order is made against someone, they are similarly obliged to obey the order.
[88] The appellant was found guilty of civil contempt. While the main purpose of sentencing for criminal contempt is punishment, historically the primary purpose of sentencing for civil contempt was viewed as compelling compliance in order to protect and enforce the rights of the party who obtained the order: Cavalon, at para. 77.
[89] However, in recent years, our courts have focused on the fact that ensuring compliance with court orders also engages important public law issues, including respect for the authority and dignity of the courts and for the rule of law: Cavalon, at para. 78; Boily, at para. 79. As a result, punishment has been added as a secondary purpose of sentencing for civil contempt for breach of a court order.
[90] In this case, the appellant was found in contempt of a receivership order. A Receiver, once appointed, is an officer of the court. The intent and effect of the appellant’s contempt of that order was to initiate criminal proceedings against the Receiver and its agents as well as to undermine the Receiver’s exclusive authority and power to deal with the Receivership property. It is difficult to think of conduct by a litigant that is more flagrant and disrespectful of the court and the rule of law. The appellant demonstrated his attitude toward the court by describing himself to the Panamanian Prosecutor as a “judicial hostage” of the court. He saw fit to take matters into his own hands, flouting the court’s order and process.
[91] This Appointment Order was made by a judge of the Commercial List of the Superior Court. That division of the court deals exclusively with commercial matters and is structured to supervise those cases closely and in a timely manner as commercial remedies often involve remedial transactions that occur very quickly during the process. That does not mean that Commercial List orders are more important or due more respect than other court orders. The added significance is that the court, made up of a small number of Superior Court judges, is more intimately involved in supervising the process, for example, of a receivership and can be immediately aware of a breach of its order and its effects on the ongoing process. I would add that the Commercial List operates efficiently and effectively based on the full co-operation and respect of the commercial bar and the litigants.
[92] The motion judge, also a judge of the Commercial List, found the appellant’s wrongdoing to be extremely serious and “demonstrat[ed] an astounding lack of respect for this court.” The only mitigating factor was that it was his first offence.
[93] While purging the contempt and apologizing to the court can also be mitigating factors, the appellant did not apologize or express any remorse for his conduct. The motion judge found that his and his lawyer’s letters to Mr. Hals asking to withdraw the Criminal Complaint did not amount to either purging or even attempting to purge his contempt. The motion judge gave four reasons: the appellant knew that Mr. Hals would not back down; he did not attempt to contact the Panamanian Prosecutor after he was found in contempt to discontinue the Criminal Complaint; he went to the interview in December 2021 without telling the Receiver or seeking leave of the court, and did not tell the Panamanian Prosecutor that he had withdrawn the application but instead said he was a judicial hostage of the Ontario court; and to the extent he could not control Mr. Hals, the situation was of his own making.
[94] In addition, there were several aggravating factors. The appellant’s conduct was “blatant, deliberate, wilful and …unrepentant”, not just accidental or misguided. The motion judge emphasized that the appellant intentionally signed the Declaration knowing it was to be used to initiate a criminal complaint against the Receiver’s representatives in Panama, without complying with the procedure provided in the Appointment Order. He engaged in self-help in the face of the Order. Finally, interfering with the Order was for his financial benefit by interfering with the Receiver’s ability to realize on assets to satisfy the judgment against Xela.
[95] In arriving at the sentence of 30-days incarceration, the motion judge considered all of the required sentencing factors including specific deterrence, general deterrence and denunciation, sentences imposed in similar circumstances, and the reasonableness of a fine or incarceration. She found that a fine would not reflect the seriousness of the appellant’s contemptuous conduct, and that only a sentence of incarceration would meet the applicable sentencing principles, with 30 days being the fit duration, sufficient but not excessive “to address the objectives of sentencing.”
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[103] Finally, the appellant asserts that the motion judge was required to consider a conditional sentence in accordance with s. 718.2(e) of the Criminal Code, R.S.C., 1985, c. C-46. This is civil contempt where the penalty is governed by r. 60.11 of the Rules of Civil Procedure, not by the Criminal Code. Nevertheless, it is clear from the reasons that the sentencing judge considered alternatives to incarceration but determined that only a custodial sentence would serve the principles of sentencing. She specifically rejected a period of probation on strict house arrest terms, which was proposed by the appellant. . LeGrand v. LeGrand
In LeGrand v. LeGrand (Div Court, 2023) the Divisional Court explains why it allows an appeal for contempt sanctions, here addressing the role of suspending child support as such sanction:[48] While appreciating the sentencing challenges facing the motions judge, I conclude that the current sanctions cannot stand for two reasons. First, it was an error in principle to suspend child support as a contempt sanction. Second, it was an error in principle to set an unbounded sanction. A contempt sanction fashioned as a penalty or a fine must be an amount that can be discharged. Each of the two sanctions is set aside.
Suspending Ongoing Child Support is Not an Available Contempt Sanction
[49] Rule 31(5) of the Family Law Rules provides that a court may order a person found in contempt to (a) be imprisoned for any period and on any conditions that are just, (b) pay a fine in any amount that is appropriate, (c) pay an amount to a party as a penalty, (d) do anything else that the court decides is appropriate, (e) not do what the court forbids, (f) pay costs in an amount decided by the court; and (g) obey any other order.
[50] Subsection 31(5)(d) confers a broad discretion on the court to fashion an appropriate contempt sanction; but that discretion is not unbounded. When fashioning a contempt sanction in parenting cases, the court must also consider the impact of the sanction on the best interests of the children.
[51] Traditionally, courts have drawn a “bright white line” around ongoing child support, considering it the right of the child, and thus unaffected by any outstanding debts between the parties. For example, it has long been held that the conduct of a custodial (decision making) parent, or a parent exercising parenting time is not relevant to the determination of child support. Court of Appeal Justice Frederick G. MacKay wrote in Carwick v. Carwick (1972), 1972 CanLII 1875 (ON CA) that “[r]eprehensible conduct by the custodial parent of a child respecting access may be the subject matter of removing the child from the custody of the offending parent, but it cannot be the basis of causing the child to suffer financially because of the interference of access rights by the custodial parent.”
[52] In reviewing the history of child support pre-dating both federal and provincial guidelines, the Supreme Court observed in D.B.S. v. S.R.G., 2006 SCC 37, [2006] 2 S.C.R. 231, that child support is the right of the child, stating at para 14 that a parents’ obligation to support their child is a legal right that exists independently of any court action taken.
[53] That “bright white line” has dimmed over time with respect to child support arrears, which in some cases have been used to offset a debt between the parties, such as an award of costs: S. v. A., 2023 ONSC 4719. In M.A.B. v. M.G.C., 2023 ONSC 3748, Justice Chappel summarized the law respecting the set-off of child support as against costs between the parties, concluding at para 86 that “ [t]he determination of whether it is appropriate to set off costs against child support arrears or an ongoing child support obligation is ultimately a matter of judicial discretion that involves a careful consideration of the facts of each case, and a delicate balancing the interests of the parties involved, the best interests of any children in the support recipient’s care, all of the objectives of costs awards and the importance of ensuring that costs awards are in fact paid.”
[54] In Rego v. Santos, 2015 ONCA 540 (C.A.) which builds on the reasoning in D.B.S. v S.R.G, the Ontario Court of Appeal upheld a set-off of child support arrears against a penalty ordered as a contempt sanction, owed by a mother to the father. The court acknowledged that, although it was unusual to do so, they were prepared to uphold the motion’s judge decision because he considered the evidence as a whole: including the amount of parenting time that had been withheld, the mother’s unreasonable litigation behaviour and the need to treat the breaches seriously, while keeping the children’s bests interests foremost in the analysis. At paragraph 14 the court found that the motion judge “was sensitive to the concern that the child should not suffer undue economic consequences and he structured the set-off accordingly,” see paragraph 14.
[55] The “bright white line” has not been dimmed with respect to ongoing child support. Ongoing child support is not a fixed debt between the parties that can be measured. It is a dynamic amount that is based on the payor parent’s income in real time. Ongoing child support and section 7 obligations change as the parents’ incomes change.
[56] It is not in a child’s best interests to lose their independent right to ongoing support from a parent within a court sanction purposed to coerce their parent’s compliance with a past court Order, or a court sanction fashioned to deter and denounce a parent’s wrongful behaviour for two reasons.
[57] First, as set out in D.B.S. supra, the child’s legal right to financial provision exists independently of any court action taken between their parents, or guardians, or a child protection society. It is a right that can be asserted by the child herself.
[58] Second, the purposes of child support and a contempt sanction are incompatible. As set out in the objectives of the Federal Child Support Guidelines the purposes of table child support are to (a) establish a fair standard of support for children that ensures that they continue to benefit from the financial means of both spouses after separation; (b) to reduce conflict and tension between spouses by making the calculation of child support orders more objective; (c) to improve the efficiency of the legal process by giving courts and spouses guidance in setting the levels of child support orders and encouraging settlement; and (d) to ensure consistent treatment of spouses and children who are in similar circumstances.
[59] A contempt sanction is a penalty imposed in response to a finding that a party has deliberately disobeyed or disrespected a court of law and its officers in the form of behavior that opposes or defies the authority, justice, and dignity of the court. As summarized in Kronberger v. Kudrocova, 2023 ONSC 2326, at paras. 44-49, the applicable sentencing principles for contempt of court in the context of family law proceedings include:Sentencing should be restorative to the victim and punitive to the contemnor. To accomplish the former requires that the sentence correlate to the conduct that produced the contempt and to accomplish the latter requires the sentence not to reflect a marked departure from those imposed in like circumstances: Cassidy v. Cassidy, 2010 ONSC 2707, 85 R.F.L. (6th) 148, at para. 10 [Cassidy].
The primary objective in sentencing civil contempt is to coerce the offender into obeying the court judgment or order: Cassidy, at para. 12; Kopaniak v. MacLellan, 2002 CarswellOnt 1309, [2002] 212 D.L.R. (4th) 309, (O.C.A.) at para. 28, citing Nigel Lowe and Brenda Sufrin, Borrie and Lowe on the Law of Contempt, 3rd ed. (1996) at pp. 655-56, and Jeffrey Miller, The Law of Contempt in Canada (1997) at pp. 13 - 17.
Punishment must be in proportion to the breach or breaches of the order. The court must consider aggravating or mitigating factors: Carroll v. Richardson, 2013 NSSC 187, 331 N.S.R. (2d) 129, at para. 20 [Carroll].
Deterrence and denunciation are also important objectives of sentencing: Carroll, at para. 21. The purpose of penalties is not to compensate the wronged party, per se. It is to punish the wrongdoer: Roby v. Roby, 2003 CanLII 2111 (ON SC), [2003] 48 R.F.L. (5th) 389, at para. 30 [Roby]. [60] Even when the sanction to be determined concerns access to children, the paramount consideration remains the best interests of the children: see Moncur v. Plante, 2021 ONCA 462, at para. 10, Ruffolo v. David, 2019 ONCA 385, 25 R.F.L. (8th) 144, at para. 19 and Valoris pour enfants et adultes de Prescott-Russell c. R. (R.), 2021 ONCA 366, at para. 27.
[61] Here, there was no consideration of the children’s best interests in suspending the mother’s obligation for child support, nor was there an adequate record on which to attempt such an analysis. The July 3, 2019 final Order was resolved on 2018 disclosed and imputed income. There was no evidence before the motion judge as to the parents’ current incomes.
[62] In summary, while it was open to the motion judge to fix a penalty with a view to the financial circumstances of the parties, it was not open to her to make a potentially indefinite order suspending the mother’s ongoing obligation for child support.
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[65] The amount of a penalty or a fine payable imposed pursuant to Rule 31 (b) and (c) of the Rules can be substantial, provided that it is reasonable and proportionate to the nature of the contempt and its mitigating and aggravating circumstances.
[66] At the same time, it must not markedly deviate from a sanction imposed in like circumstances, see Stone v. Stone, 2019 ONSC 3214. In Cassidy v. Cassidy, 2010 ONSC 2707, starting at para. 13, the court sets out the principles of sentencing in on a finding of civil contempt in a family law proceeding as a consideration of (a) the available sentences, (b) the proportionality of the sentence to the wrongdoing, (c) the similarity of sentences in like circumstance, (d) the presence of mitigating factors, (e) the presence of aggravating factors, (f) deterrence, (g) the reasonableness of a fine, and (h) the reasonableness of a proposed period of incarceration.
[67] The Ontario Court of Appeal has since emphasized the additional principle of restraint in sentencing, see Gagnon v. Martyniuk, 2020 ONCA 708, at para. 25, and that judicial discretion in sentencing be informed by the best interests of the child(ren): Moncur v. Plante, supra, at para. 10, Valoris pour enfants et adultes de Prescott-Russell c. R. (R.), supra, at para. 27; Chong v. Donnelly, supra, at para. 11; and Ruffolo v. David, supra, at para. 19.
[68] The effect of the second term of the motion judge’s contempt sanction – that the father is precluded from bringing a further proceeding before the court while he remains non-compliant – created a sanction that was unbounded.
[69] An unbounded contempt sanction is an error in principle when the effect is to create a penalty or a fine that can never be discharged. Moreover, it renders the sanction unmeasurable and immune from an analysis of proportionality.
[70] This is not to say that a coercive penalty cannot accrue over time. The motion judge imposed such a remedy initially ($1,000 per month, to a total of $12,000). That order was not appealed, and it does not disclose an error in principle. See, for example, King v. Cameron, 2020 ONCJ 548, where Parent J. ordered graduated access with a fine against the mother of $500 for every missed visit during a specified period of adjournment.
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