February 9th, 2014
Even though debtors’ prison was abolished many generations ago, judgment debtors can still land themselves in jail if they refuse to answer questions on examinations in aid of execution, also known as judgment debtor or JD exams. In Ontario, judgment creditors have the right to ask questions about a debtor’s assets and financial wherewithal once a year. A judgment debtor is required to attend and answer questions, failing which findings of contempt, fines and even jail time can be imposed.
In the case of Doobay v. Diamond, the Ontario Court of Appeal dismissed the defendant Diamond’s appeal of the lower court’s finding that he was in contempt of court, sentenced to 42 days in jail and fined $40,000 based on his continued refusal to answer questions asked on his JD exam.
Diamond was examined in aid of execution in 2008 and refused to answer any questions. A Master of the Ontario Superior Court of Justice ordered him to re-attend again in 2008, but again he refused to answer a substantial number of questions. Diamond thereafter consented to provide written answers in 2009, but the plaintiffs were still unsatisfied with the quality of the answers.
After a three-day hearing in 2010, a Judge of the Ontario Superior Court of Justice found that the answers provided by Diamond were “largely unresponsive” and “must be considered to be a deliberate attempt to obfuscate the issue before the court for the purpose of avoiding complying with the Order.” Diamond was found in contempt, fined $20,000 and sentenced to 21 days’ imprisonment for his flagrant disregard of a court order. Diamond appealed the sentence, lost, and eventually served his sentence in 2011. Diamond did not purge his contempt, however, and the plaintiffs brought another motion for contempt. Diamond sought an adjournment of the motion, which the Court granted on a peremptory basis subject to Diamond providing satisfactory answers. Diamond again provided answers, which were largely unresponsive.
Diamond again sought an adjournment on the return of the motion on the basis that he thought the matter had settled, which the plaintiffs obviously did not. Upon review of the new answers provided by Diamond, the motion judge concluded that the answers demonstrated “the same evasiveness and unwillingness to comply with the Court Orders” that the appellant had displayed in previous court appearances and that he was “obviously still playing tricks and games to avoid the Court’s authority”. The motion judge sentenced Diamond to a further term of incarceration of 42 days and imposed an additional fine of $40,000.
On appeal, Diamond complained that he was not granted an adjournment to call witnesses to support his assertion that there was in fact a settlement of the matter. The Court of Appeal rejected this on the basis that the initial adjournment was granted on a peremptory basis and that Diamond should have had his witnesses ready for the hearing. It was not improper for the motion judge to have denied a further adjournment when the first adjournment was given on terms.
The motion judge did, however, address the alleged settlement and concluded that Diamond, by providing further written answers to the outstanding questions after a settlement was allegedly concluded, conducted himself in a manner contrary to the existence of a settlement or his reasonable belief that the matter had been settled. Moreover, when Diamond appeared and sought the first adjournment on terms, he did not raise the issue of settlement; rather, he obtained an adjournment on an undertaking to provide responsive answers within 30 days. All of Diamond’s conduct during this period was inconsistent with an honest belief that the matter had settled, the motion judge found.
On the issue as to whether a finding of contempt should have been made, Diamond complained that the motion judge did not review all of the answers that he provided so as to ascertain whether they were in fact unresponsive and could not have thus, made a proper finding of contempt. While the motion judge did not review every answer provided by Diamond, he did identify a long list of answers as inadequate, such as repeated replies of “fishing expedition” by Diamond. The motion judge found that Diamond knew that such answers were unacceptable.
The Court of Appeal also rejected Diamond’s argument that he had already been penalized for his breach and that double jeopardy applied to prevent him from being penalized again. On this point, the Court of Appeal quoted from another Ontario Court of Appeal case, Chiang (Trustee of) v. Chiang to the effect of: “To permit only one penal sanction for the ongoing breach of an order deprives the court of the ability to impose measured, but incremental, sanctions to obtain compliance with that order.”
The only issue to which the Court of Appeal took exception was the fact that the motion judge determined Diamond’s liability for contempt and imposed a penalty at the same time. In the normal course, the Court of Appeal held, liability should be determined first and the defendant be given an opportunity to purge contempt before a penalty is imposed. Even though that did not occur in the case at hand, the Court of Appeal would have nevertheless not objected because of Diamond’s delinquency throughout.
The Supreme Court of Canada refused leave to appeal the decision of the Ontario Court of Appeal.