Gaunt v. Hawes, 2012 NSSC 305

SUPREME COURT OF NOVA SCOTIA (FAMILY DIVISION) Citation: Gaunt v. Hawes, 2012 NSSC 305 Date: 20120416 Docket: 1201-56166 Registry: Halifax Between: Geoffrey James Gaunt Applicant v. Kelley Elizabeth Hawes Respondent Judge: The Honourable Justice Deborah Gass Heard: April 16, 2012, in Halifax, Nova Scotia Written Decision: August 13, 2012 By the Court: [ 1 ] This is an application by Geoffrey James Gaunt to discharge a contempt order issued April 12, 2011, pursuant to Civil Procedure Rule 89.14. [ 2 ] In support of the application, Mr.

Gaunt filed an affidavit sworn January 16, 2012, in which he seeks the discharge of the contempt order because he declared personal bankruptcy on March 3, 2011 and has obtained a Notice of Stay of Proceedings from his trustee, extinguishing all debts and liabilities which existed at the time of the bankruptcy. [ 3 ] The original order for which he was found in contempt was a Corollary Relief Judgment dated April 7, 2009 which provided, in part, at paragraph 21:

The locked in retirement account registered in the name of Geoffrey Gaunt held by Invesco Trimark account number 14577847 shall bedivided equally between the parties such that one half of the locked in retirement account will be transferred to the Respondent KellyHawes. [4] The Application for leave to apply for contempt for failure to comply with this provision was made on December 2, 2010. Leave was granted on February 15, 2011. On March 21, 2011 the hearing on the contempt application was conducted with both partiespresent. At the conclusion of the hearing, the court found Mr.

Gaunt guilty of contempt for failure to divide the pension in accordancewith the order. For his contempt, he was ordered to pay a “fine” to Ms. Hawes in the amount of $11,200. He was given one year to paythe fine and in default, he was ordered to serve 30 days in custody. [5] Mr. Gaunt argues that his bankruptcy extinguishes his debts, and he relies on the decision of the Supreme Court of Canada inSchreyer v. Schreyer 2011 SCC 35 , 2011 S.C.C. 35 . [6] The Corollary Relief Order was made in 2009. It ordered Mr. Gaunt to divide a pension. He did not do so.

He was foundguilty of contempt. [7] The Corollary Relief Judgment was an order to carry out

an act, not to pay a sum of money. Therefore, it is not a debt whichcould be extinguished by the bankruptcy. [8] Secondly, the order to pay a “fine” of $11,200 to Ms. Hawes is not a debt per se. It is a penalty for the contempt and it isexcluded by s. 178(1)(

a) of the Bankruptcy and Insolvency Act: Debts not released by order of discharge 178.

(1) An order of discharge does not release the bankrupt from (

a) any fine, penalty, restitution order or other similar in nature to a fine, penalty or restitution order, imposed by a court in respect of anoffence, or any debt arising out of a recognizance or bail; [9] The offence was the breach of an order which predated the bankruptcy by almost two years. Such contempt proceedings areavailable to ensure public respect for court orders. [10] It would be an absolute perversion of the administration of justice to discharge or set aside this order. 1. The original order predates the bankruptcy. 2. The original order is not a debt. It is an order to do something.

It could not be extinguished by bankruptcy. 3. The application was not made in good faith. The bankruptcy was declared on March 3, 2011 after leave was granted on February15, 2011 to proceed with a contempt application which was scheduled for March 21, 2011. Mr. Gaunt was aware of these proceedings. 4. The fine that was imposed on March 21, 2011 was not a debt. It was a penalty for breaching a previous order, and as such isexcluded by the legislation.

[11] These very issues are addressed in the text Bankruptcy, Insolvency & Family Law (2nd ed., Carswell, 2004), authored by RobertKlotz. Mr. Klotz refers to a number of cases and in particular the court notes the decision in Manis v. Manis, (ONCA), [2001] O.J. No. 3672 (ONCA) where the husband had violated a non-dissipation of assets order. He was then ordered to remediatethe dissipation by taking the wife off a joint line of credit and having her removed from a mortgage. He did not comply and declaredbankruptcy four months later.

The Ontario Court of Appeal confirmed the lower court’s contempt finding and the penalty imposed. [12] If I am wrong in concluding that this fine is not a debt, and were it to be considered in fact a debt, it would clearly be a postbankruptcy debt and not covered by the bankruptcy, following the decision in Roby v. Roby [2003] O.J. No. 4408 (S.C.J. Campbell, J.,2003) where the husband declared bankruptcy after an order for equalization.

There the court fined him and in addition specified that thefine constituted a post bankruptcy debt. [13] The application to discharge the contempt order is therefore dismissed and the penalty for the contempt is 30 days in custody,as provided in the Contempt Order of April 19, 2011. J.