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Costs, penalties, fines: What is the difference?

• by Amruta Ponkshe

Originally published in the OFLM 2024-03 edition

Overview

Rule 1(8) of the Family Law Rules empowers the court to deal with a party’s failure to obey a previous order by making any order that it considers necessary for a just determination of the matter, including striking pleadings and dismissing a claim, to name a few.

However, the court’s most commonly used mechanism to redress a party’s non-compliance of a court order is still an order for costs.

But can a court order a party to also pay a penalty or a fine? If so, what is the difference, if any, between costs, penalties and fines and what are the requirements to obtain them?

The following article explores these issues.

Failure to provide disclosure

In Monga v. Monga (2024 ONSC 761), Justice Kraft heard a motion brought by the applicant father to redress the respondent mother’s failure to provide complete financial disclosure. The disclosure was required pursuant to a consent order made by Justice Vella at the party’s case conference. The applicant father sought the following orders:

  1. sanctions be imposed on the wife of $250 a day until she cured her breach of a previous disclosure order made by Justice Vella on consent at the party’s case conference;
  2. the wife be prohibited from seeking further relief of the court until the disclosure was provided;
  3. the wife produce additional disclosure; and
  4. the wife pay him costs.

The wife submitted that any penalty would be punitive and requested the husband’s motion be dismissed. 

Justice Kraft had to determine two issues:

  1. Was the wife in breach of the disclosure order made by Justice Vella?
  2. If so, was the appropriate remedy to (a) order sanctions of $250 a day, and (b) not permit the wife to seek further relief until the breach was cured?

Breach of the disclosure order

The husband provided the court with an updated schedule of what disclosure requested had not been answered by the wife. The wife did not argue that there was disclosure outstanding to the husband. However, her explanation was that she had made best efforts to provide her disclosure. For bank statements the wife was unable to produce, she provided an authorization and direction to the husband and his counsel to obtain missing back statements.

Accordingly, at paragraph 28, Justice Kraft held that the wife was in breach of the disclosure order.

Remedies available to the court

The next question before her Honour was to determine the appropriate remedy to cure this breach.

At paragraph 30, Justice Kraft recognised that there must be consequences to the wife for failing to provide the ordered disclosure. Her Honour reiterated that the remedies listed in Rule 1(8) are not exhaustive and discussed the factors put forth in Owen v. Owen (2018 ONSC 1083) that the court must consider in determining the appropriate remedy in such situations.

In Owen, at paragraph 12, Justice Faieta held that –

In making this assessment a court must consider: (1) the disclosure provided; (2) an itemization of the disclosure that the impugned party has failed to provide; (3) whether there has been wilful disobedience; (4) proportionality.

Justice Kraft also discussed the factors set out by the Ontario Court of Appeal in the seminal case of Mullin v. Sherlock (2018 ONCA 1063). In Mullin, at paragraph 45, Justice Pepall held that –

…In assessing the most appropriate remedies, a judge should consider the following factors:

  • the relevance of the non-disclosure, including its significance in hindering the resolution of issues in dispute; 
  • the context and complexity of the issues in dispute, understanding that an uncomplicated case should have little tolerance for non-disclosure, whereas a case involving extensive valuation of assets may permit some reasonable delay in responsiveness;
  • the extensiveness of existing disclosure; 
  • the seriousness of efforts made to disclose;
  • the explanations offered by a defaulting party for the inadequate or non-disclosure; and,
  • and any other relevant factors.

At paragraphs 34 and 35, Justice Kraft held that the wife’s failure to provide full disclosure was not egregious or a willful non-compliance with a court order. In reaching this conclusion, her Honour considered the following facts:

  1. there was only one order for disclosure, and it was made on consent;
  2. the wife did not argue that the disclosure requested was not relevant or it was a fishing expedition, or not proportional – rather she agreed to provide the requested disclosure;
  3. she made clear attempts and best efforts to produce the requested disclosure;
  4. the husband controlled the parties’ finances during the marriage and the wife did not have access to many of her accounts;
  5. the wife provided the husband with authorizations and directions to obtain missing bank statements directly.  

Penalty versus Fine

The husband characterised the payment of $250 per day as a penalty rather than a fine. Justice Kraft reiterated the decision made in SNC-Lavalin Profac Inc. v. Sankar (2009 ONCA 97) that this characterization was appropriate given that a fine for civil contempt is to be paid to the Treasurer of Ontario rather than to a party in the proceeding.

In SNC-Lavalin Profac Inc., Justice Laskin held that “Contempt of court for breach of a court order is an offence against the authority of the court and the administration of justice.” The court referred to section 143(2) of the Courts of Justice Act which stipulates that a fine for contempt of court should not go to the plaintiff in the lawsuit, but to the Crown.

In Macnamara v. Weaver (2023 ONSC 192), at paragraph 53, Justice Price restated Justice Faieta’s clarification in Altman v. Altman (2022 ONSC 4479) of the distinction between a “fine”, which can be imposed after a finding of contempt, under Family Law Rule 31(5)(b) and a “penalty” which, under Rule 31(5)(c), can be ordered to a party after a finding of contempt.

Penalty only when contempt found

In Shapiro v. Feintuch (2018 ONSC 6746), the court dismissed the respondent’s request for a payment of $2,500 in “costs” over and above any of his legal fees and disbursements as a consequence of the applicant’s failure to comply with a parenting order.  In arriving at this conclusion, Justice Monahan stated at paragraph 38 that:

There is legal authority in the Family Law Rules for ordering one party to make a payment to another party, but only in circumstances where the court finds a person in contempt of court. Rule 31(5)(c) provides that where a finding of contempt is made, the person in contempt may be ordered to pay “an amount to a party as a penalty”…

In Belcourt v. Charlebois (2020 ONSC 4124), at paragraph 33, the court discussed that:

…rule 1(8)(g) states that in the event of a breach of a court order, the court may, on motion, make a contempt order.  In the present case, there is no motion for a contempt order, only for a penalty.

To conclude, a penalty under Rule 31(5)(c) can only be imposed on a contempt motion, after a finding of contempt is made.

Does the court have jurisdiction to impose a penalty under Rule 1(8)?

Justice Kraft answered this question in the negative after reviewing case law and analysing the facts at hand. 

For example, in Granofsky v. Lambersky (2019 ONSC 3251), Justice Diamond ordered that a ‘monetary penalty’ of $500 per day be paid.  His Honour explained, at paragraph 28, the grounds for the Court’s authority to impose a penalty under Rule 1(8) as follows:

… the Court has jurisdiction under the Family Law Rules to order a fine or monetary payment as part of its role to control and enforce its own process. Such a remedy places a price on non-compliance with court orders and disclosure obligations commensurate with that process. … a remedy of a fine or monetary payment should be reserved to exceptional and/or egregious circumstances… ….

Similarly, in Di Poce v. Di Poce (2022 ONSC 2099), Justice Shore relied on Rules 1(8) which states that if a person fails to obey a court order, “the court may deal with that person’s breach by making any order that it considers necessary for a just determination of the matter”. Her Honour ordered the respondent to pay to the applicant $2,500 for each day his disclosure under previous orders remained outstanding.

In Nodder v. Wasserman (2023 ONSC 6982), while referring to Granofsky and Di Poce discussed above, Justice Vella noted that:

While the list of enforcement remedies do not expressly include the assessment of a monetary penalty for non-compliance with a court order (unless by motion for contempt which does provide for a monetary penalty), the court in these two decisions have in fact added a monetary penalty as part of the court order enforcement arsenal, without the need to bring a motion for contempt of court.

In Altman (above), Justice Faieta had to determine whether the court had jurisdiction under Rule 1(8) to impose a penalty on the respondent father for his failure to deliver income and business valuation reports and other financial information to the applicant mother as required by a previous court order. His Honour declined to impose a monetary penalty for the breach on the basis that ordering a monetary penalty payable to a party is expressly dealt with by Rule 31(5)(c) of the Family Law Rules as a remedy for contempt. At paragraph 44, his Honour held:

There is express authority to order a person to pay fine or penalty under Rule 31(5) of the Family Law Rules if that person is found in contempt of the court for failing to comply with an Order.  A finding of civil contempt requires proof of the following elements beyond a reasonable doubt: (1) the order alleged to have been breached must state clearly and unequivocally what should and should not be done; (2) the party alleged to have breached the order must have actual knowledge of it; and (3) the party allegedly in breach must have intentionally done the act that the order prohibits or intentionally failed to do the act that the order compels: … “[t]hese three elements, coupled with the heightened standard of proof, help to ensure that the potential penal consequences of a contempt finding ensue only in appropriate cases”.  These heightened requirements and the procedural safeguards provided by Rule 31 are avoided if Rule 1(8), which has no such requirements or procedural safeguards, is used to impose a penalty upon a party for non-compliance with an order.

In Altman v. Altman (2022 ONSC 6952), the Divisional Court denied the applicant mother’s motion for leave to appeal the order of Justice Faieta refusing the imposition of monetary penalty in Altman above.

In Bouchard v. Sgovio (2021 ONCA 709), the Court of Appeal noted, without deciding the issue, that there are limits to the enforcement remedies a court can impose for non-compliance with court orders under r. 1(8) short of contempt.  Contempt, along with the sanctions that can be assessed for contempt, must be proven on the evidentiary standard of beyond a reasonable doubt.  Conversely, the remedies for non-compliance set out in Rule 1(8) must be proven on the lower threshold evidentiary standard of a balance of probabilities.

As discussed in Altman (above) at paragraph 44, “whether a court may make an order requiring a party to pay a penalty to another party, absent a finding of contempt, pursuant to Rule 1(8) remains an open question at the Ontario Court of Appeal.”

Justice Kraft ultimately dismissed the applicant husband’s request to impose a penalty of $250 per day on the respondent wife.

At paragraphs 50-54, her Honour also held that an order to prevent the wife the opportunity to seek further relief in the case until the breach was cured would not be an appropriate remedy either. With the primary objective of the Family Law Rules in mind, her Honour gave the wife an additional 30 days to answer outstanding items, failing which the husband would have leave to bring a motion to strike the wife’s answer/claim with respect to the financial claims in the matter.

Conclusion

The Family Law Rules offer several ways in which a party may seek redress for breach of a court order.

It is therefore incumbent on the party’s family lawyer to analyse the facts of the case carefully and advise their client what the most appropriate way to proceed would be.

The choices include (a) requesting costs under Rule 1(8) which usually only cover reimbursement of legal fess and disbursements, or (b) bringing a contempt motion to seek a monetary penalty under Rule 31(5)(c).

And as noted in Monga v. Monga, an order for a monetary penalty requires a party to bring a contempt motion and meet a higher threshold evidentiary standard of beyond a reasonable doubt.

Unfortunately the respondent in Monga had not only failed to bring a contempt motion but also failed to meet the lower evidentiary threshold on balance of probabilities for the court to order costs under Rule 1(8).