This week on Hull on Estates, Sean Graham and Justin deVries talk about court order compliance, contempt and enforcement of court orders in general.

Court Order Compliance - Hull on Estates Podcast #82

Posted on October 23^rd, 2007 by Hull & Hull LLP

Sean Graham:  Hello and welcome to Hull on Estates #82 on Tuesday, October 23^rd, 2007.

Welcome to Hull on Estates, a series of podcasts for the Canadian legal community dealing with issues and insights surrounding estate planning in Canada.   Hosted by the lawyers of Hull & Hull, the podcast will touch on some key considerations when planning estates and Wills.  Now, here are today’s hosts.

Sean Graham:  This is Sean Graham.  I’m here with Justin de Vries. Hi  Justin.

Justin de Vries:  Hi Sean, this is a good opportunity for us.  We’ve never podcast together, so this is our first one.  And today we’re going to take a topic that, I suppose on paper seems a little bit dry, but hopefully we’ll make it more exciting. And it’s really all about enforcing Judgments and Orders.  And because it’s such a large topic, we’re really going to look at the enforcement of or recovery of money Orders.  So that’s what we’re looking at today, money Orders.  There’s other things that you can try to recover or enforce when it comes to a Court Order, but today is money.  And that includes Judgment and Orders. 

Now, in our world, as you said Sean, a lot of things settle.

Sean Graham:  Yeah, and once they settle, often you will head off to Court as a condition of settlement and get Court approval of the settlement and then the question is, do the parties then comply with the terms of the settlement.  And it does seem like a dry topic, compliance with Court Orders, perhaps to lawyers, but for a client who has a Judgment and thinks that that’s the end of the litigation and finds out, uh-oh, there’s other steps we have to enforce, it’s anything but dry to them.

Justin de Vries:  And it is possible in the estate context to issue a Statement of Claim and get default judgment against an estate and then trying to enforce that.  But I think often where I see it is trying to enforce costs Orders that there has been some serious litigation about a preliminary issue.  Ultimately one party is successful and the other party then essentially disappears or is not defending or prosecuting the litigation.  So how do you collect on a cost Order?  And I know, Sean, that you’ve had some experience with contempt Orders.  There’s a couple of options a party has if they want to enforce the payment or recovery of money.  One is a Writ of Seizure and Sale, there’s garnishment, that’s also well known. And you can even appoint a Receiver if need be and that’s more when you’re dealing with a company.  If you’d like to try to enforce an Order for the recovery or possession of land which you can see in a settlement, that’s by a Writ of Possession.  Or an Order for the recovery or possession of personal property other than money, that is enforced by a Writ of Delivery.  So the bottom line is that the Rules, and it’s largely Rule 60, deals with, and when I say Rule, it’s the Rules of Civil Procedure, it largely deals with the recovery of money in our instance and then also the enforcement of Court Orders generally.  And Sean, why don’t you talk a little bit about the contempt proceeding that you can bring.  That’s been blogged on before and we’ve podcast it, but just as a quick thumbnail sketch for the listeners.

Sean Graham:  For sure.  Thanks Justin.  Contempt is basically, I guess all these enforcement Orders are kind of a last resort.  But contempt is certainly that.  Contempt is generally not available if the only Order you’re trying to enforce is the payment of money.  A contempt is generally for an Order requiring a person to do an act or abstain from doing an act which has been mandated by a Court Order.  And the problem with a contempt often, from my point of view, is it’s not the most practical measure because there’s all kinds of relief you can ask for in contempt including jail, but also including fines.  And then the problem you have is if someone’s not complying with an Order to begin with, the question is are they going to comply with the contempt Order?  So often it will wake someone up, and they’ll start to co-operate.  But practically speaking, it’s a tough one.

Justin de Vries:  And in a civil context, Sean, how far is the Court willing to go?  In your experience, have you seen the Court issue a warrant for someone’s arrest ultimately if they ignore a Court Order for the payment of money?  Or is it more likely that they’re going to get a fine?  But what’s your thought on that?

Sean Graham:  I’ve never, having done several of these now, I’ve never once had a judge throw someone in jail.  I’ve heard the judge threaten to do it and then work on the other remedies.  Certainly fines are fairly commonplace and certainly costs Orders.  Not necessarily a fine but a genuine costs Order to genuinely pay the entirety of the costs, I’ve seen that.  But again, throwing someone in jail, aside from stressing the seriousness of a Court Order, doesn’t actually help them comply with the prior Order.  So practically speaking, it can be satisfying to see someone you’re very angry with thrown in jail, but it doesn’t actually, practically speaking, help much.

Justin de Vries:  Right, and what I’ve seen is fines on a per diem or by day basis.  That usually gets people’s attention.  And often you can ask when you’re in front of a judge to enforce an Order of the Court that there be a larger Order that you can seize any assets that they may have in a bank account and if you come, you know, forewarned with some sort of or forearmed with information about what the bank account is, you may get that.  I recently did a Writ of Seizure and Sale in respect of land.  And the one thing that strikes me in that context is that you really have to read the Rules because each regime, be it garnishment, be it the recovery of land, be it the recovery of personal property, or trying to get money, has it’s own way forward.  And our system works very much on notice unfortunately.  So you are giving a debtor notice of what you’re doing and an opportunity really, in a perfect world to pay some people may say, it’s a perfect opportunity to take the money and run.  So you have to be careful but with the sale and seizure of land, for example, you can’t do anything once you get your Writ of Seizure and Sale for land for 4 months.  You just have to sort of sit on it, which seems a bit bizarre.  And then you can only begin to enforce it, as I said, after the 4 months and no sale can take place until 6 months.  So again, the idea is that someone may have an opportunity to satisfy any judgment by selling the land.  Now, I was trying to enforce a costs Order so I was really after money, I just knew that this person had some land that I was trying to get the Sheriff to seize and then sell.  And then even after the 6 months is over, and the sale takes place, the debtor has to have at least 30 days’ notice of the sale.  And one of the things you have to do as well, if there’s a mortgage on the property, you have to write to the mortgagee, in other words, the one with the money, to say listen, I’m about to seize this property or the Sheriff is and so some serious business is going to happen.  So there seems to be a lot of opportunity for the debtor to get away with things but bottom line is there’s a regime that has to be followed in order to do that.  One thing I find, Sean, I don’t know what your experience is, with respect to Rule 60.12, which really allows a Court wide discretion really within the litigation.  If someone is not complying with an Order, not paying costs, for example, and we all know about the concept of coming to Courts with clean hands if you’re asking for relief.  But 60.12 really allows a judge to craft any Order to put the litigation at a standstill, to strike the Claim, strike a defence, make whatever Order is just.  And often that will get the attention of a party.

Sean Graham:  Yeah, honestly I haven’t used 60.12 recently.  The hope is, obviously, that especially in estate litigation where we have our Orders giving directions which really lay out the litigation at the beginning, that hopefully you won’t have to rely on them.  But there certainly, I can think of instances where it…maybe I need to bring it and for sure the broader the Rule it seems to me, at least in estate litigation, the broader the Rule, the more discretion allowed to the judge, the more you can get away from the strict technicalities of the Rule and allow the judge to strike at the practical heart of it.  And I think that that 60.12 seems to me to be a great Rule to do that.

Justin de Vries:  One of the things as well is that, you know, in the estate world, we still occasionally have discoveries.  And if someone is not showing up and you’re getting your Certificate of Non-Attendance, 60.12 is one of those, what I call, basket rules that you should really throw in because it allows you to say to the judge listen, the guy didn’t show up, I want an Order mandating him to show up and just so you know judge, you have not only the ability under a specific rule for that, but you have a larger discretion here that you can do whatever you want.  For example, if he doesn’t show up the second time, the defence is struck or the claim is struck.  Or if it’s an Order for directions, that there’s going to be a hearing as to damages, you know, those kind of options are available.  And just to finish off too I think we should look at the idea of Rule 60.18 which allows a creditor to examine a debtor to really see what their assets are.  And it’s a great way to needle someone because you’re really getting them in to ask about their assets, so you can get at their money, their assets, so that you can use one of the enforcement procedures that we just talked about, to try to get paid.

Sean Graham:  Yeah, and you almost wonder, the threat to use that particular Rule in some cases is probably going to get you there.  They may comply with the Order.  They may not want to tell you the in’s and out’s of their financial dealings.  And that could be actually as frightening as a Court Order or even a contempt motion, in some cases.

Justin de Vries: Yeah, no, it’s a very good point I think.  They may have a lot more money there that they don’t want to have you know anything about.  And there’s going to be a lot of leeway granted to you.  I mean it’s a normal examination in the sense that there can be a refusal, you’d have to go to Court and get the, you know, refusal answered if it’s a genuine question you’re asking.  And of course costs are really going to be, you know, dealt in your favour generally because, you know, you’re really trying to enforce an Order.  And that’s Rule 60.19 which deals with the costs of all this enforcement.

Sean Graham:  And maybe I can ask, Justin, in your experience, and obviously having been through the costs of getting the original Order, the original judgment, whether it’s on a negotiated basis or, you know, all the way through trial, what’s been your experience about the success of getting your costs for not only the proceedings, but the further enforcement steps you’ve had to take?

Justin de Vries:  I think getting costs of the enforcement is not really an issue.  Rule 60.19, I think a judge will want to make sure that the administration of justice is not brought into disrepute by people ignoring Court Orders.  Now they give, as you pointed out in the contempt world, they give people lots of chances.  But eventually the Court’s patience does come to an end, but having an extra chance or a second try doesn’t mean that you don’t get your costs.  I don’t think it allows you obviously to go and visit earlier costs or earlier Orders that you got to try to get your costs.  What it deals with is Rule 60.19 is the current costs incurred.  Then I don’t see any reason why you wouldn’t get those on a substantial indemnity basis, payable forthwith and with interest owing in due course.

Sean Graham:  But again, the substantial indemnity…well not again but…the substantial indemnity may not, for the client themselves, it may not be the full freight and that’s consistently causing concern to my clients anyway.

Justin de Vries:  Yeah, I think what people forget is that it’s substantial indemnity.  It’s not complete indemnity and with any kind of costs award, it’s wide discretion of the Court.  Appeal Courts won’t really interfere in discretion.  It just becomes a dog’s breakfast if they do.  It really renders a judge of first instance without much power if the discretion is taken away.  And clients have to know, I generally say for partial indemnity, I think you’re looking between 30% and 60%.  And I think for substantial indemnity, it can be anywhere from 75% to, you know, in the rare instances, 100%.  But it can be as low as 75% and people have to keep that in mind, that the system is designed so that you really don’t get full recovery.  But I think substantial indemnity when trying to enforce an award of money or to recover money, you’re going to get closer to that 100% than you’re going to get in many other instances because a judge and the Courts will not like to see their Orders ignored.

Sean Graham:  Well, I think that’s hopefully a good primer on these issues.  Thanks so much Justin for speaking to these things. 

Justin de Vries:  Thanks Sean and I’ll look forward to doing our next one together.

This has been Hull on Estates with the lawyers of Hull & Hull.  The podcast you have been listening to has been provided as an information service.  It is a summary of current legal issues in estates and estate planning.  It is not legal advice and you are reminded to always talk with a legal professional regarding your specific circumstances.

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