In a recent 2016 decision in Greenberg v. Nowack, Justice Perell of the Ontario Superior Court of Justice dismissed a contempt motion against a stubborn and non-compliant debtor in a judgment debtor examination gone awry. Although sympathetic to the Plaintiffs’ frustration at being unable to recover monies on their judgement, the Court ruled that imprisoning the debtor would be harsh and ineffectual. Justice Perell made this observation about the contempt motion:
…[the Plaintiffs’] have lost sight that the contempt power is not to be used as an instrument of coercion to secure the payment of debts or to vent their anger at the judgment debtor, however justified that anger might be.
Since 2013, the Plaintiffs, a retired physician and his wife, had been attempting to enforce a $3.5 million consent judgment against the Defendant Steven J. Nowack. On October 23, 2013, Mr. Nowack was arrested and charged with five counts of fraud over $5,000, and two counts of uttering forged documents. A Toronto Police Service news release alleges that Mr. Nowack had presented himself as a foreign-currency trader and five victims were defrauded of approximately $7.1 million. One of the criminal counts of fraud concerned the Plaintiffs’ investments with Mr. Nowack.
In the motion before the court, the Plaintiffs sought to have Mr. Nowack imprisoned for his alleged contumelious failure to co-operate in his judgment debtor examination and his non-compliance with a series of court orders that directed him to provide documents before and at his judgment debtor examination.
Mr. Nowack had already spent 15 days in jail for his failure to provide documents for the judgment debtor examination, but the Plaintiffs were not satisfied with his co-operation after his release from jail. They asked the court to again find Mr. Novak in contempt and to again imprison him, this time for at least six months, if not longer. The contempt motion before Justice Perell represented the sixth such motion since the proceedings were initiated.
In his decision, Justice Perell returned several times to the fundamental objective of the judgment debtor process as the determination of whether a debtor has the financial resources to satisfy their debts. The objective of the process was not, it was made clear, to punish wrongdoers. Justice Perell held that:
I have been case managing this matter since July of 2015, and in my opinion, the [Plaintffs] have moved from using the civil process as an instrument to collect what is justly owed them and they are encroaching on the territory that belongs to the criminal law process to punish wrongdoers. The [Plaintiffs], whose frustration with Mr. Nowack is understandable and legitimate, are victims, but unfortunately their unbridled anger has contributed to a dysfunctional, costly, inefficient, and misdirected civil judgment enforcement process.
In response, Justice Perell fashioned a remedy designed to help get the enforcement process “back on track and focused on its proper purposes.” Justice Perell took note of Alberta’s Civil Enforcement Act, and the requirement for debtors to complete a “Judgement Debtor Examination Questionnaire” within 30 days.
The questionnaire asks simple and straightforward questions about the finances and future income of the debtor. Justice Perell stopped short of advocating for the general applicability of the questionnaire in future judgement debtor processes, holding instead that the questionnaire was particularly well-suited to the specific circumstances before him. Likewise, Justice Perell did not call into question the correctness of the earlier decision to imprison the debtor.
If you would like to receive a copy of the questionnaire that the judgment debtor was required to answer under oath, please contact me.
The author would like to thank Puya Fesharaki, student-at-law, for his assistance with this post.