Heather Elaine MacLellan Petitioner v. Gerald Louis Giovannetti Respondent LIBRARY HEADING Judge: The Honourable Justice Beryl MacDonald, 2012 NSSC 212

SUPREME COURT OF NOVA SCOTIA (FAMILY DIVISION) Cite as: MacLellan v. Giovannetti, 2012 NSSC 212 Date: 20120601 Docket: 1201-063905 (SFHD-066302) Registry: Halifax Between: Heather Elaine MacLellan Petitioner v. Gerald Louis Giovannetti Respondent LIBRARY HEADING Judge: The Honourable Justice Beryl MacDonald Heard: May 18, 2012, in Halifax, Nova Scotia Keywords: Family, Contempt Legislation: Collection Act R.S. 1989, c.76, s.4. Rules: Former Civil Procedure Rule 52, and 55 Civil Procedure Rule 89.02

Summary: A contempt order was requested for several failures by the Respondent to pay money to third parties and to the Petitioner as ordered in a Corollary Relief Judgment. A contempt order was also requested for the Respondent’s failure to abide by a parenting provision in the order and because he failed to “maintain a medical benefit plan and an insurance policy”. Civil Procedure Rule 89.02 prevents a contempt order for a “failure to pay money” to the Petitioner or to third parties. The wording of the parenting provision was vague and imprecise and could not be enforced through contempt.

The failure to maintain the medical and insurance policies was in reality a “failure to pay money” and as a result could not be enforced through contempt. THIS INFORMATION SHEET DOES NOT FORM PART OF THE COURT ’ S DECISION. QUOTES MUST BE FROM THE DECISION, NOT THIS LIBRARY SHEET.

SUPREME COURT OF NOVA SCOTIA (FAMILY DIVISION) Cite as: MacLellan v. Giovannetti, 2012 NSSC 212 Date: 20120601 Docket: 1201-063905 (SFHD-066302) Registry: Halifax Between: Heather Elaine MacLellan Petitioner v. Gerald Louis Giovannetti Respondent Judge: The Honourable Justice Beryl A. MacDonald Heard: May 18, 2012, in Halifax, Nova Scotia Counsel: Deborah Conrad, counsel for the Petitioner Colin Campbell, counsel for the Respondent By the Court: [ 1 ] On May 18, 2012 the parties and their counsel appeared before me on an application made by Ms. MacLellan seeking a contempt order against Mr.

Giovannetti for several failures to abide by the terms of a Corollary Relief Order dated August 18, 2010. [ 2 ] In preparing for this hearing I noticed some potential procedural irregularities. The Notice of Motion for a Contempt Order ,which was to be served upon Mr. Giovannetti, was not in the file. However, Mr. Giovannetti had been represented when I heard Ms. MacLellan ’ s Motion for Permission to request a Contempt Order. When the parties appeared before me on May 18 th Mr. Giovannetti ’ s counsel made no reference to the original Motion for Contempt Order and when I inquired of counsel for Ms.

MacLellan she was surprised the document was not in the file. Given that both parties were present and ready to proceed I did not delay the matter because of the absence of this paperwork. That paperwork would merely have repeated what was in the Motion for Permission and the affidavit filed with that Motion.

[3] I did grant permission for Ms. MacLellan to proceed with this Motion for Contempt. At the time neither counsel nor I hadconsidered the court’s jurisdiction to make a contempt order for the non-payment of debt. Everyone had focused on whether there was aprima facie case and did not consult the Civil Procedure Rules in doing so. [4] At this hearing I did, as a preliminary matter, inquire of the parties about the court’s jurisdiction to make many of the findingsthat were requested by Ms. MacLellan. I also inquired about counsel’s

interpretation of the order sought to be enforced through contemptin respect to the parenting provision allegedly breached. I raised these issues with counsel to narrow the focus of any evidence to beheard during the hearing. Civil Procedure Rule 89.02 provides as follows: A contempt order may not be granted to punish a failure to pay money, unless the failure is in violation of either of the following kindsof orders: (

a) an order for family maintenance or support; (

b) an order for recovery of money that expressly provides that a failure to turn over, or pay, funds may be punished as contempt. [5] I had made an error in discussing the provisions of the former civil procedure rules with counsel because I suggested a similarprovision appeared in what then was Rule 55 “Contempt Orders”. No such provision was in that Rule. In fact former Civil ProcedureRule 52 did indicate an order for the payment of money was enforceable in a proceeding for contempt. However, in MacNeil v.

MacNeil (1975), (NS CA), 14 N.S.R. (2d) 398 (N.S.C.A.), the Court of Appeal noted that the Collection Act, R.S.N.S. 1967,c.39 s.3 provided: Subject to this Act, no person shall be arrested or imprisoned for default in payment of any judgment ordering or adjudicating thepayment of money. “Judgment” included payments for maintenance or support. This wording still appears in the Collection Act R.S. 1989, c.76, s.4. It mustbe noted that the Collection Act did not prevent a contempt order because of a failure to pay money but only the imposition ofimprisonment as a penalty.

Civil Procedure Rule 89.02 removes the remedy of contempt for any failure to pay money except when thatfailure relates to the provision of maintenance and support or the order permits a contempt application. In this case because theCorollary Relief Order is filed with the Director of Maintenance Enforcement, this court cannot make a contempt finding nor order apenalty in respect to any failure to pay child support. The enforcement of those provisions of the Order is to be determined by theDirector. [Maintenance Enforcement Act, S. N.S. 1994-95, c. 6 s. 7] [6] In Dickie v.

Dickie 2007 SCC 8 , [2007] 1 S.C.R. 346 the Supreme Court of Canada considered a provision in theOntario Rules of Civil Procedure somewhat similar to our Rule 89.02. This particular case required a decision about whether a provisionin an order required “ the payment of money”. If it did the action for contempt could not proceed. Justice Robichaud in Lahanky v.

Lahanky 2012 NBQB 30,while reviewing the impact of the New Brunswick Rules of Court in respect to contempt proceedings, quoted Dickie, supra as theleading authority regarding the unavailability of contempt as an enforcement procedure for non-payment of a money judgment.

JusticeRobichaud decided: 14 ... as such, they are orders for the “payment of money” as contemplated by Rule 61.03 (1) of the Rules of Court and areenforceable through the issuance of an Order for Seizure and Sale and not through the Court’s power to make findings of contempt. [7] Civil Procedure Rule 79 permits the collection of a debt by way of an execution order and Rule 80 provides for otherenforcement orders including “seizure and protection of property”, putting a party in “possession of property”, authorizing a person “ to

do

an act required to be done by a party under the order... ” , granting a “ receivership order ” and so on. These provisions provide the remedy for non-payment of a debt in Nova Scotia. [ 8 ] After further discussion with counsel I decided that several of the alleged failures for which a contempt finding was requested arose from provisions in the Separation Agreement and Minutes of Settlement incorporated into the Corollary Relief Order issued August 18, 2010 requiring Mr. Giovannetti to pay money owed to 3 rd parties or to pay money to Ms. McLellan as reimbursement pursuant to an indemnification clause.

Those alleged failures were: ∙ Gerald Giovannetti has failed to pay the Infinite Avion account # ****as required at clause 6 (f) (I) (a). ∙ Gerald Giovannetti has failed to pay the MBNA Canada card as required at clause 6 (f) (I) (b). ∙ Gerald Giovannetti has failed to pay the 4 th Motor Credits account #****as required at clause 6 (f) (I) © . ∙ Gerald Giovannetti has failed to pay the TD Canada Trust Visa account # ****as required at clause 6 (f) (I) (d). ∙ Gerald Giovannetti has failed to pay the Chase Sears Service account as required at clause 6 (f) (I) (e). ∙ Gerald Giovannetti has failed to pay the CIBC Card Service account # ****as required at clause 6 (f) (I) (f). ∙ Gerald Giovannetti has failed to pay to Heather MacLellan the sum of $14,115.75 in repayment of the Royal Bank Visa account # **** as required at clause 6 (f) (iii). ∙ Gerald Giovannetti has failed to reimburse Heather MacLellan for repairs on the matrimonial home in the amount of $722.95 has required at clause 6 (f) (iv). ∙ Gerald Giovannetti has failed to reimburse Heather MacLellan for the children ’ s expenses as required at clause 6 (f) (v). ∙ Gerald Giovannetti has failed to pay his one half of the counseling fee at Breakthrough in the amount of $280.00 as required at clause 6 (f) (iv). ∙ Gerald Giovannetti has failed to reimburse Heather MacLellan for a parking ticket for the amount of $82.00 as required at clause 6 (f) (viii). ∙ Gerald Giovannetti has failed to pay to Heather MacLellan costs in the amount of $750.00 ordered by the Honorable Justice Williams as required at clause 6 (f) (ix). [ 9 ] None of these requirements to pay money were for family maintenance or support.

Neither the Separation Agreement and Minutes of Settlement nor the Corollary Relief Order issued August 18, 2010 expressly provide that a failure to pay the amounts listed above may be punished as contempt. [ 10 ] While a failure to pay money in these circumstances may have permitted a finding of contempt under the previous Civil Procedure Rules the new rules prevent such a finding.

[ 11 ] Having dealt with the issue in respect to the failure to pay money I then asked counsel to consider whether the parenting provision in the Order sought to be enforced through a contempt finding met the standard required for that finding. The allegation was that Mr. Giovannetti failed to comply with the requirements of paragraph 5 (

e) of the Separation Agreement and Minutes of Settlement incorporated into the Corollary Relief Order issued August 18, 2010. That paragraph is as follows: Both parties shall exert every effort to maintain free access to and unhampered contact between the children and the other and to foster a feeling of affection between the children and the other parent.

Neither shall do anything which would estrange the children from the other parent, which would injure the opinion of the children as to their mother or father, or which would impair the natural development of the children ’ s love and respect for the other parent.

Furthermore, neither party shall make public by any means any information about the other, which would have the possibility of negatively impacting on the children ’ s relationship with either parent or their friends and family. [ 12 ] I asked counsel how this clause provided sufficient information to the parties to know when they were, or were not, carrying out its terms. I suggested this paragraph did not contain clear, certain and unambiguous language.

I pointed out that courts have required precision in the use of language so the person affected will know exactly what he or she is required to do or abstain from doing. After hearing the submissions of counsel on this point I determined this provision in the order was nebulous and ambiguous. Merely by reading the Order Mr.

Giovannetti would not know what it was he was to do or refrain from doing and for this reason there would be no purpose in hearing evidence in respect to this ground for contempt. [ 13 ] As a result of my discussions with counsel only two items remained, a request for findings that: 3 Gerald Giovannetti has failed to maintain medical and dental coverage through his company for the benefit of the children as required at clause 5(l). 4 Gerald Giovannetti has failed to maintain a life insurance policy in the amount of $500,000.00 naming Heather MacLellan as irrevocable trustee for the benefit of their children as required at clause 7 (a). [ 14 ] The actual wording of the terms incorporated into the Corollary Relief Order are: 5(

l) Gerry agrees to maintain his existing medical and dental plan through his company for so long as this plan is available to him for the benefit of the children. 7(

a) Gerry agrees to maintain life insurance with London Life in the principal amount of $500,000.00 naming Heather as the irrevocable trustee for the benefit of the children for so long as the children of the marriage are defined as children of the marriage by the Divorce Act so as to provide that the proceeds shall be payable to Heather upon terms whereby Heather shall spend the net income and, if necessary encroach upon the capital for the purpose of responding to the maintenance and support needs of the children.

In the event that insurance coverage is not maintained, Heather shall have a claim against the estate of Gerry on behalf of the children for the face amount. [ 15 ] One definition of the word “ maintain ” is “ to keep in an existing state ” . Synonyms are: to hold, to keep, to preserve, and to sustain. The meaning of the word is clear and unequivocal and it appears in clause 5(1) and 7(a). Mr. Giovannetti does not deny these policies no longer exist; he has not maintained them. [ 16 ] To maintain these policies Mr. Giovannetti would have to pay money to the insurers.

In Dickie , supra, the husband had failed to post security for support and he failed to provide an irrevocable letter of credit in favour of the wife to secure his child and spousal support obligations. In order to comply with these provisions he would have to pay money to a bank to obtain the letter of credit or provide it some from of security for eventual payment of the debt if there was a call on the security or letter of credit. The Supreme Court dismissed the argument that, because of this reality, these terms in the Order were for the “ payment of debt ” .

In doing so the majority approved the approach used by Laskin J.A., as he then was, in his dissent in Dickie v Dickie , 2006 O.A.C. 257.

[ 17 ] In Dickie v Dickie , 2006 O.A.C. 257 Laskin J.A. commented that legislation and rules had been developed to prevent the imprisonment of persons for nonpayment of “ ordinary debts ” (para. 107).

He referred to the analysis in “ The Law of Contempt ” , 3 rd ed., at 583: 106 The authors (at 583) discuss the underlying rationale for the different treatment of breach of an order to pay a creditor and the breach of an order for security: The essence of the distinction seems to be that the payment of money as security is not a debt within the meaning of the Debtors Act, because no definite and fixed obligation to pay a sum of money has thereby been created.

As Chitty J. said: Judgments or orders for payments into court are generally not final: the money paid in may be paid for security only for the safety of the fund, and the person ordered to pay is not infrequently entitled to have some part of the money afterwards paid out to him. On the other hand once the sun has become fixed, a definite obligation to pay a sum of money is created and it is in essence therefore a debt. [ 18 ] Maintaining a medical plan or an insurance policy requires a fixed payment to be made to the insurer. Failure to pay will cause the policy to be cancelled.

The payment is not made to a court or into a solicitor ’ s trust account, another distinction mentioned in Dickie . One might argue that this type of monetary exchange does not constitute an “ ordinary debt ” because it is a payment for the provision of a future service or benefit rather than a payment for money already lent or a service or item already delivered or purchased. I find this to be a distinction without a difference. This is the payment of money to a third party for service.

Rather than sue the person who requested the insurance policy, the remedy for most creditors, this creditor merely cancels the service and refuses to provide the future benefits the individual could have received if the appropriate payment had been made. [ 19 ] The failure by Mr.

Giovannetti to maintain the medical benefit plan and the insurance policy is a requirement to pay money and cannot be the subject of a contempt order. [ 20 ] If I am incorrect in this analysis there may be additional difficulty interpreting the meaning to be given to “ for so long as this plan is available to him for the benefit of the children ” , words used in clause 5(1). Mr.

Giovannetti suggests that once he ran into economic difficulty the medical and dental plan was no longer available to him through his company because the company could not afford to pay for it. [ 21 ] Material filed in respect to the Divorce proceeding between these parties indicated Mr. Giovannetti is an employee of Autorail Forwarders described as a division of a corporate entity, GIAMAC Inc. The income tax returns filed by Mr. Giovannetti at the time show income only as an employee.

Although he is the sole shareholder and director of GIAMAC Inc., no dividends appear to have been paid to him in respect to those returns. It appears that Autorail Forwarders is essentially a business name under which GIAMAC Inc. operates. It has no separate financial records. It may have been created so Mr. Giovannetti could be classified as an employee. [ 22 ] As a sole shareholder and director of GIAMAC Inc. Mr. Giovannetti does have the ability to manipulate the flow of money in that Corporation. He speaks of the corporation as if it was a proprietorship.

He may be able to pay himself more than his 2011 T-4 slip discloses. In 2011, according to that information, his annual income was $52,000.00. Determining whether an individual should have received more than his or her declared income from a Corporation he or she controls depends upon an analysis of the corporate financial records. No such analysis formed the basis of the evidence presented before me. Mr. Giovannetti did testify about the struggles this company has faced in recent years and I have nothing before me to suggest he has been untruthful other than the request that I not believe what he has told me.

I have been asked to ignore his information, or to discount it, because I should consider it unreasonable that he would have a declared income of $158,267.04 for the purpose of the Separation Agreement and Minutes of Settlement dated August 6, 2010, which reduced to $52,000.00 by 2011. The suggestion is, this is a manipulation to avoid the financial responsibilities imposed upon him by that Separation Agreement. [ 23 ] I have been provided with the financial statements of GIAMAC Inc. for the year ended April 30, 2010. There was negative income from operations in that year.

Debt increased substantially primarily due to a mortgage on a building owned by the company. The company appears to operate primarily on lines of credit all of which are in substantial arrears as is Mr. Giovannetti ’ s personal line of credit. A foreclosure action has been taken in respect to the mortgage on the building owned by the company. To date Mr. Giovannetti has not been able to refinance this debt to halt the legal proceedings commenced against the company. The information he has provided

is credible. Whether he can hold onto this business is doubtful. Perhaps he has sufficient contacts in the type of business he operated to lose what he has and start over. I have no evidence before me to suggest this is likely. The company appears to be in financial distress, however, that may not justify the failure to pay for the medical and dental benefit policy that had been in place previously. This company is leasing a vehicle, primarily for Mr, Giovannetti ’ s use, at a cost of $1,000.00 per month. A company in financial distress should likely not be leasing such an expensive vehicle.

It could have chosen instead to continue whatever payments were required to provide Mr. Giovannetti with the medical and dental coverage that had been available to him for the benefit of the children at the time he signed the Separation Agreement. In addition he was able to earn an income of $50,000.00 in 2011. This would suggest a personal ability to pay for medical and dental coverage. Mr. Giovannetti suggested this coverage was unaffordable but he did not testify about the cost of that coverage so his plea that there was an inability to pay could be compared against the income he had available to him.

Under these circumstances neither he nor the company was unable to maintain the policy. If I was not faced with the provisions of Civil Procedure Rule 89.02, I would find him in contempt. [ 24 ] If the failure to maintain the insurance policy is punishable in a contempt proceeding, Mr. Giovannetti argues his impecuniosity is a defense to a contempt finding. In addition, Ms. MacLellan has her remedy for his failure to pay, she can sue his estate upon his death while any of the children are dependents.

These arguments may have been given consideration at the penalty phase of a contempt hearing but I do not accept they can in any way affect a contempt finding. A direct intention to disobey an order is not required for a finding of contempt. Disobedience to an order resulting from an accidental or unintentional act does not constitute

an act of contempt. I cannot define Mr. Giovannetti ’ s failure to maintain the insurance policy as an accidental or unintentional act. In addition he had a declared income of $50,000.00 in 2011 and a much greater income in 2010. I cannot consider him to be impecunious. [ 25 ] As a result of my decision about the

interpretation of Civil Procedure Rule 89.02 and the ambiguity and lack of clarity evident in paragraph 5 (

e) of the Separation Agreement and Minutes of Settlement incorporated into the Corollary Relief Order issued August 18, 2010, I dismiss Ms.MacLellan ’ s application for a contempt order against Mr. Giovannetti. [ 26 ] If Mr. Giovannetti is seeking costs in this proceeding, submissions on costs are to be provided as inexpensively as possible and that may mean a 15 minute appearance before me for oral submissions or written submissions within a particular time frame. If counsel cannot agree on the procedure to follow they are to arrange for a quick conference call before me to resolve this matter. __________________________ Beryl MacDonald, J.S.C.