When a civil court makes an order, not respecting that order can place a party in contempt of court. A recent Ontario decision succinctly explained what constitutes contempt of court and, in this particular family law dispute, what happens when the original order is, in fact, impossible to comply with.
The case stems from an earlier order made in a family law dispute after a husband and wife separated. In the original order, made on January 9, 2018, the husband was required to name the wife as irrevocable beneficiary of a policy of life insurance. The court required that he contact his insurer and make arrangements to change the existing beneficiary designations to irrevocable beneficiary designations in favour of the wife “in trust for the children” within 30 days. Within the order, the justice specifically stated in parenthesis: “if allowed by the insurer”.
However, in the hearing dated September 4, 2018, the wife brought a motion for a finding that the husband was in contempt of the court because he has failed to do so.
Position of the Parties
The husband stated that he has a life insurance policy through RBC Insurance. The children are the irrevocable beneficiaries of coverage totalling $280,000, while the wife is the designated trustee for the children but her designation as trustee is not “irrevocable”.
After the original order had been made, the husband stated that he made a formal written request to RBC to designate his wife as the irrevocable trustee on the policy; however, RBC advised him that they do not allow such a designation on their policies. The husband therefore argued that he had complied with the order by making the request to the insurer; the fact that the insurer would not allow the request did not put him in contempt.
In addition to arguing that the husband had failed to follow the order and make the proper designation, the wife also stated that a finding of contempt was warranted because he had not acted in good faith to take all reasonable steps to comply with the order by, for example, obtaining a further order requiring RBC to make the trustee designation irrevocable or purchasing a new life insurance policy from an insurer that allows an irrevocable trustee designation.
The Law on Contempt
The court began by setting out the law on civil contempt. It requires that the moving party establish beyond a reasonable doubt that:
- the order alleged to have been breached states clearly and unequivocally what should or should not be done;
- the alleged contemnor had actual knowledge of the order’s terms; and
- the alleged contemnor intentionally did the act the order prohibited or intentionally failed to do the act the order required.
The court stated that all the elements must be satisfied; otherwise, the motion for contempt must be dismissed. However, the court noted that even where all three parts of the test are satisfied:
“[A] judge retains an overriding discretion to decline to make a contempt finding where it would be unjust to do so, such as where the alleged contemnor has acted in good faith to take reasonable steps to comply with the relevant court order.”
The court dismissed the motion for contempt.
First, it found that the order was not clear and unequivocal, as the express wording made the obligation conditional by stating “if allowed by the insurer”.
Second, the court rejected the wife’s argument that the husband had intentionally bought life insurance that did not allow for such designations, because there was no evidence to that effect.
Additionally, the court rejected the wife’s argument that the husband was in contempt because he has not done everything possible to designate her as the irrevocable trustee under the policy; she argued that RBC would allow an irrevocable trustee designation if the husband obtained a court order requiring them to do so. However, the court found that nothing in the original order imposed a duty on the husband to take further steps if the insurer did not allow the irrevocable trustee designation. The court refused to find that his failure to bring such a motion against RBC resulted in him being in contempt.
The court concluded by stating:
“A court has an overriding discretion to decline to make a contempt finding where the alleged contemnor has taken all reasonable steps to attempt to comply with the order. But this obligation to take all reasonable steps to attempt to comply with the order only arises after there is a finding that the three required components of the test for contempt have been met. This is not the case here.”
Separation and divorce are challenging for everyone involved. When dealing with custody or access disputes, matters involving spousal and child support, the division of assets, and other family issues, emotions can be your worst enemy. Having an experienced family lawyer on your side can help you stay focused and resolve disputes as quickly and amicably as possible.
At Campbell Bader LLP our family team has collectively spent more than twenty years advising clients about family disputes, including those involving high net worth individuals or complex matters. Contact us online or by phone at 905 828 2247 to schedule a consultation.