Source: https://www.canadianjusticereviewboard.ca/articles-caselaw/case-law/greenberg-v.-nowack,-2016-onsc-808
Timestamp: 2019-04-24 09:49:11+00:00

Document:
Since 2013, the Plaintiffs H. Joseph Greenberg and Pepi Greenberg, a retired physician and his wife, have been attempting to enforce a $3.5 million consent judgment against the Defendant Steven J. Nowack. In the motion now before the court, the Greenbergs seek 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 has already spent 15 days in jail for his failure to provide documents for the judgment debtor examination, but the Greenbergs are not satisfied with his co-operation after his release from jail, and they say they have had enough of pursuing Mr. Nowack. They ask the court to again find him in contempt and to again imprison him, this time for at least six months, if not longer.
 For the reasons that follow, I dismiss the Greenbergs’ motion, but on terms that Mr. Nowack complete a “Judgment Debtor Questionnaire” that is attached as Schedule “A” to this decision. The Questionnaire is taken from the “Financial Statement of Debtor (Individual Debtor)” authorized in Alberta pursuant to s. 35.10 of its Civil Enforcement Regulation, enacted pursuant to Alberta’s Civil Enforcement Act, RSA 2000, c C-15.
 The Greenbergs have failed to prove beyond a reasonable doubt that Mr. Nowack’s recent conduct is contemptuous and, therefore, their contempt motion should be dismissed with no order as to costs. However, the Greenbergs and Mr. Nowack have shown that the enforcement process in this matter is broken and needs to be fixed.
 I have been case managing this matter since July of 2015, and in my opinion, the Greenbergs 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 Greenbergs, 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.
 Requiring Mr. Nowack to complete a sworn Judgment Debtor Questionnaire, which is an idea that I have borrowed from the Ontario Law Reform Commissions, Report on the Enforcement of Judgment Debts and Related Matters (Part I) (Toronto: Ministry of the Attorney General, 1981) and which I found implemented in Alberta under its Civil Enforcement Act, is the court’s way of getting this derailed judgment enforcement procedure back on track.
 On July 3, 2013, the Greenbergs recovered a judgment against Mr. Nowack for approximately $3.5 million. What followed after that judgment is described, in part, by Justice Morgan in his decisions cited Greenberg v. Nowack, 2015 ONSC 2015 (CanLII) and Greenberg v. Nowack, 2015 ONSC 2256 (CanLII). The events are also described in other court documents from the Greenberg action and from other court actions against Mr. Nowack. These court documents were filed by the Greenbergs for the purpose of this contempt motion. For present purposes, I will refer the reader to Justice Morgan’s decisions and I shall use them and the motion material to describe what occurred before I became seized of this matter in July 2015. Then, I shall describe what I observed in case managing the judgment enforcement process in the immediate case.
 On November 21, 2012, the Greenbergs commenced an action against Mr. Nowack to recover $3,712,262.80 plus pre- and post-judgment interest. The Greenbergs are elderly and partially disabled; Mrs. Greenberg is a sexagenarian, and Dr. Greenberg is a nonagenarian. Their ten-paragraph Statement of Claim alleges that Mr. Nowack was a former patient of Dr. Greenberg, and it alleges that Mr. Nowack presented himself as an experienced investment advisor without disclosing that he was not licensed by the Financial Services Commission.
 The Greenbergs alleged in their Statement of Claim that despite their requests, Mr. Nowack did not return the $3 million that they had invested with him.
 On February 4, 2013, after repaying $40,000 in December 2012, Mr. Nowack and the Greenbergs entered into Minutes of Settlement, which provided for eight installment payments between February 2013 and November 2013. In the event of default, Mr. Nowack consented to a judgment being granted against him for the unpaid settlement installments.
 Mr. Nowack defaulted in payment, and on July 3, 2013, Justice Allen signed judgment against him in the sum of $3,552,000 with interest at 3.0 percent per annum.
 I pause here to point out that Justice Allen’s judgment is a simple one-paragraph judgment for payment of money. The judgment does not direct an accounting or order a tracing of the funds invested with Mr. Nowack. I shall return to this point below, but I foreshadow to say that in my opinion part of the reason why the judgment debtor process in this case has gone awry is that the Greenbergs seem fixated on proving what actually happened to their investment funds or how it came about that Mr. Nowack did not repay their investment funds to them and to have Mr. Nowack imprisoned for failing to restore their investment funds.
 With respect, as unsecured creditors, the Greenbergs’ preoccupation should have been on enforcing their judgment in accordance with the Rules of Civil Procedure and the Creditors Relief Act, 2010, S.O. 2010, c.16 or perhaps by initiating bankruptcy and insolvency proceedings. They already have a civil judgment, the police do not need their assistance for the criminal proceedings against Mr. Nowack, described below, and at this juncture, the Greenbergs do not need to prove Mr. Nowack’s civil wrongdoing; the Greenbergs are already judgment creditors.
 With a judgment in hand, the Greenbergs arranged for a judgment debtor examination of Mr. Nowack on July 3, 2013. He attended, but he came without any financial records or other documents. The examination was adjourned to August 16, 2013, and when Mr. Nowack did not produce his documents before the resumed examination, it was cancelled, and in the fall of 2013, the Greenbergs brought a motion returnable in December 2013 before a Master for an order requiring Mr. Nowack’s re-attendance to be examined with proper disclosure of his documents.
 Also in the fall, more precisely, 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.
 One of the criminal counts of fraud concerned the Greenbergs’ investments. The Toronto Police Service News Release alleged that Mr. Nowack had presented himself as a foreign-currency trader and five victims were defrauded of approximately $7.1 million. During the police investigation that had started the summer of 2013 and that culminated in Mr. Nowack’s arrest, his financial records and documents were seized by the police when they executed a search warrant at his home.
 On December 10, 2013, Master Glustein, now Justice Glustein, ordered Mr. Nowack to attend a judgment debtor examination with full disclosure of the relevant documents.
 When Mr. Nowack did not comply with the Master’s Order, the Greenbergs responded with a contempt motion. The motion was heard on July 4, 2014 by Justice Firestone. There was no finding of contempt; in his endorsement, Justice Firestone stated the he was not satisfied that contempt had been proven beyond a reasonable doubt. Justice Firestone did order Mr. Nowack to make full disclosure.
 Around this time, if not earlier, Mr. Nowack began using the argument that he was unable to produce the documents because they had been seized by the police and the documents were in the custody of the Crown prosecutor.
 On November 7, 2014, Mr. Nowack brought a motion before Master Dash for a stay of Justice Firestone’s Order. Master Dash dismissed the motion, but his Order made it clear that Mr. Nowack did not have to disclose documents that were in the custody of the Crown.
 The Greenbergs then responded with their second motion to have Mr. Nowack found in contempt. The motion was heard by Justice C.J. Brown on November 12, 2014. Once again, the contempt motion was not successful. Justice Brown’s Order restated that Mr. Nowack was obliged to make disclosure and the Order provided a list of documents to be disclosed.
 As the enforcement process moved into 2015, Mr. Nowack persisted in his explanation about why he was not producing documents, copies of which had been returned by the Crown pursuant to its Stinchcombe disclosure obligations.
 In any event, Mr. Nowack did not comply with Justice Brown’s Order, so the Greenbergs brought their third contempt motion, and it was heard in a sequence of attendances by Justice Morgan on March 20, March 27, and April 8, 2015.
 During the contempt hearing process, Justice Morgan provided Mr. Nowack with an opportunity to disclose the documents that were his own documents and not documents otherwise obtained and disclosed by the Crown as the result the police investigation.
 After Mr. Nowack wasted this opportunity, Justice Morgan found Mr. Nowack in contempt and sentenced him to 15-days imprisonment. Justice Morgan also ordered Mr. Nowack to comply with paragraph 2 of Justice Brown’s Order, and he ordered that any failure to comply shall be treated as a separate matter of contempt.
On April 8, 2015, you commenced to serve your sentence for contempt of Court as ordered by Mr. Justice Morgan. The ruling of Mr. Justice Morgan (of which you have a copy) reminded you that the finding of contempt was made upon your failure to comply with Court Orders, and in particular, the Order of Madam Justice Brown which was made last November. Under the current Order of Justice Morgan, we also remind you, that upon your release from custody, you are obliged to forthwith comply with the Order of Madam Justice Brown, and should you fail to do so, I will simply renew my Contempt motion, which will result in your most likely being incarcerated for a much lengthier time period.
As you are scheduled to be released from jail on April 23, 2015, I will give you two weeks from the date of your release to comply with Justice Brown’s Order for production, and accordingly, unless same is properly complied with on or before May 8, 2015, I will simply renew my Contempt Application.
 True to their lawyer’s warning, on May 19, 2015, the Greenbergs brought another contempt motion, returnable on June 17, 2015.
 On June 17, 2015, Justice Pollak adjourned the contempt motion.
 On July 21, 2015, I heard the Greenbergs’ new contempt motion. This time, although Justice Morgan’s Order spoke only of Justice Brown’s Order, the Greenbergs sought Mr. Nowack’s imprisonment for six months for the alleged continuing breach of the Orders of Master Glustein, Justice Firestone, Justice Brown, and Justice Morgan.
 Without formally ruling on whether Mr. Nowack was in contempt, I adjourned the motion to provide Mr. Nowack with an opportunity to purge his contempt by returning to the court on July 30, 2015 and: (1) delivering a copy of his income tax statements for the taxation years 2010 to 2014; (2) delivering a signed authorization directing Scotia Bank, CIBC, TD Bank, RBC, and HSBC to provide copies of his personal and business bank statements and banking records for the period 2010 to 2015 to date; (3) delivering a signed authorization directing FXCM (a foreign currency firm) to provide copies of the records of his trades as principal or as agent for others; and (4) delivering an authorization to the aforesaid institutions of any credit card statements (personal or business).
 As a term of the adjournment, I directed that a copy of the endorsement be served by e-mail on the Crown prosecutor having carriage of Mr. Nowack’s criminal proceedings and I ordered the Crown prosecutor to attend on the return of the motion on July 30, 2015 to show cause why the Crown should not be ordered to provide the Plaintiffs with copies of the documents that the Crown had seized and that had been subsequently disclosed to Mr. Nowack’s then criminal counsel, Brian Greenspan.
 While it may not have been apparent from my endorsement, my intent in making the order then, and my purpose thereafter, was to find a means for the Greenbergs to obtain the information to satisfy themselves about whether Mr. Nowack had the financial and property resources to satisfy his judgment debt and about whether he might have hidden his assets from creditors.
 On July 30, 2015, the parties returned to court, including a representative of the Attorney General, who hand delivered a computer disk of material to the Greenbergs’ lawyer.
 I ruled that Mr. Nowack had purged his contempt, but I ruled that he remained liable to perform his obligations as a judgment debtor. Once again, my purpose was to provide the Greenbergs with the ways and means to obtain the information to satisfy themselves about whether Mr. Nowack had the resources to satisfy his judgment debts and about whether he might have hidden his assets.
This is a continuation of the contempt motion that I adjourned on July 21, 2015 on terms that would allow Mr. Nowack to purge his contempt. Pursuant to my adjournment order Mr. Nowack returned to court today with a copy of his income tax return for 2010, which is his most recent filing and with various authorizations to the financial institutions and to FXCM. I find beyond a reasonable doubt that Mr. Nowack was in contempt of several court orders but that he has now purged his contempt. However, Mr. Nowack remains liable to perform his obligations as a judgment debtor and therefore I shall remain seized of this matter until further Order and I make the following order ….
(1) The Plaintiffs may use the authorizations to obtain financial and trading records of Mr. Nowack and if unsuccessful they may apply to the court for other relief as they may be advised.
(2) Mr. Nowack shall re-attend for a continuation of his judgment debtor exam upon being served with an appointment for examination.
(3) Prior to the judgment debtor exam, the Plaintiffs may serve on Mr. Nowack such documents and records as they be advised and Mr. Nowack shall to the best of his ability use those documents to prepare an accounting of the funds received from the Plaintiffs and the outgoing and incoming use and return of those funds (the tracing of the funds). This accounting shall be provided to the Plaintiffs prior to the resumption of the judgment debtor exam.
(4) On consent and without any opposition from Mr. Nowack, I order the Attorney General to produce to Plaintiffs’ Counsel and to Mr. Nowack a copy of the documents set out in Schedule “A” attached to this endorsement within thirty days. The production of the documents is subject to the deemed undertaking and the Attorney General may charge for the cost of providing copies.
 I pause here to say that in their motion materials for the contempt motion now before the court, the Greenbergs ignore the fact that I ruled that Mr. Nowack had purged his contempt and they continue to rely on his non-compliance with all the prior orders of the court. The Greenbergs also rely on the fact that Mr. Nowack has not paid the costs awards on the earlier orders as grounds for finding him in contempt.
 On October 7, 2015, the parties re-attended before me because a problem had emerged about obtaining information from Forex, the foreign exchange office with which Mr. Nowack had dealings.
This action is in the enforcement stage. I am scheduling a 1-hour attendance on October 27, 2015 at 9:00 a.m. to schedule Mr. Nowack’s motions to set aside the default judgment, for a stay, and to vary my order of July 30, 2015. At that hearing in July Mr. Nowack signed several authorizations to facilitate the completion of his judgment debtor examination. Today’s attendance was scheduled to address a difficulty that has arisen. Forex, an institution that may have information relevant to the judgment debtor proceedings required an authorization different from the form already signed by Mr. Nowack. Mr. Nowack, however, was reluctant to sign the form because of a concern that it provided personal information that he was not required to disclose. After I advised Mr. Nowack that the information was within the scope of what should be disclosed at a judgment debtor examination, he agreed and did sign the authorization and consent ….
 By October 27, 2015, the day set to schedule Mr. Nowack’s motion, he had not served any motion material, and that day he requested an extension of time to do so. I granted that extension to November 6, 2015 and scheduled another case conference for November 18, 2015.
This Court declares that Steven Nowack who was in contempt of the Orders of Justice Brown dated November 12, 2014 and the order of Justice Morgan dated April 8, 2015 has now purged his contempt and will not be sanctioned for contempt.
I further order in pursuance to my direction order of October 27, 2015 that Mr. Nowack shall have until November 30, 2015 to bring a Wagg motion to obtain the documents he says that he needs from the Crown’s brief to support a motion to set aside the default judgment granted by Justice Allen.
I further order that in any event, Mr. Nowack shall provide an accounting as previously ordered to the Plaintiffs by no later than December 18, 2015 failing which the Plaintiff may bring a motion to have Mr. Nowack held in contempt.
I further order that Mr. Nowack shall have until January 2, 2016 to bring a motion to set aside the judgment of Justice Allen and that a condition of bringing such a motion is that he pay the sum of $5,000 into court to abide the determination of costs of the motion. ….
 Following the November 18, 2015 attendance, Mr. Nowack did not provide the accounting as previously ordered, and he did not bring a motion to set aside the judgment granted by Justice Allen.
 With Mr. Nowack’s failure to provide any accounting by December 18, 2015, the Greenbergs brought another contempt motion, which was argued on January 22, 2016.
 Mr. Nowack attended the contempt hearing. Before the hearing, he did not provide any affidavit evidence. At the hearing, Mr. Nowack, who had been sworn to tell the truth at earlier attendances, attempted to offer an explanation for his failure to provide the accounting.
 Mr. Nowack said that he had attempted to do an accounting, but the records he had received from the Crown were inadequate to provide the details of the incoming and outgoing of the funds he had received from Mr. Greenberg and other investors. Mr. Nowack said that he could not afford to obtain copies of the cheques he had written from the banks with which he had accounts during the relevant time. He said that he had tried to do an accounting but without the information from the bank, he could not identify the payees of the cheques he had written on the various accounts.
 The Greenbergs’ counsel indicated that they had had enough and just wanted Mr. Nowack imprisoned.
 A person who deliberately and willfully breaches a court order, other than an order for payment of money, commits civil contempt of court: Chiang (Trustee of) v. Chiang (2009), 2009 ONCA 3 (CanLII), 93 O.R. (3d) 483 (C.A.) at para. 9, var’g (2007), 2007 CanLII 82789 (ON SC), 85 O.R. (3d) 425 (S.C.J.).
 The focus of the law of civil contempt is on the enforcement of court orders other than the payment of money. Under the express wording of rule 60.05, an order for the payment of money is excluded from the reach of a contempt order under rule 60.11: Forrest v. Lacroix Estate (2000), 2000 CanLII 5728 (ON CA), 48 O.R. (3d) 619 (Ont. C.A.).
 Where the alleged contempt is the failure to comply with a court order, a three-pronged test is applied: (1) Did the order clearly and unequivocally state what should and should not be done? (2) Did the person disobey the order deliberately and wilfully? (3) Was the contempt proven beyond a reasonable doubt?
 See: Prescott-Russell Services for Children and Adults v. G. (N.) (2006), 2006 CanLII 81792 (ON CA), 82 O.R. (3d) 686 (C.A.); Bell ExpressVu Ltd. Partnership v. Torroni (2009), 2009 ONCA 85 (CanLII), 94 O.R. (3d) 614 (C.A.) at para. 21; Hobbs v. Hobbs, 2008 ONCA 598 (CanLII),  O.J. No. 3312 (C.A.) at paras. 26-28; 1196303 Ontario Ltd. v. Glen Grove Suites Inc., 2009 CanLII 40564 (ON SC),  O.J. No. 3270 (S.C.J.) at para. 21;Nelson Barbados Group Ltd. v. Cox, 2010 ONSC 569 (CanLII),  O.J. No. 278 (S.C.J.) at para. 19; Neighbourhoods of Windfields Limited Partnership v. Death,  O.J. No. 1304 (S.C.J.); Cellupica v. Di Giulio, 2010 ONSC 5839 (CanLII), supp. reasons 2011 ONSC 1715 (CanLII);Geremia v. Harb, 2007 CanLII 1893 (ON SC),  O.J. No. 305 (S.C.J.) at para. 31.
 A finding of contempt will not be made for breach of an order unless its meaning in the particular circumstances is clear and unambiguous: Bell ExpressVu Ltd. Partnership v. Torroni, supra; Jaskhs Enterprises v. 1444707 Ontario Ltd.,  O.J. No. 4062 (S.C.J.) at para. 40.
 In my opinion, the Greenbergs’ contempt motion fails all three prongs of the test for contempt, and they 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.
 The administration of justice is long past using imprisonment as a coercive measure to compel debtors to pay their debts. The contempt power found in rule 60.11, upon which the Greenbergs rely explicitly, states that a contempt order is not available to enforce an order requiring a person to pay money. (See Rule 569 of the former Rules of Practice.) The contempt power is used to facilitate the judgment enforcement process not to return to the days of debtors prisons where persons were imprisoned simply because of an inability to pay their debts.
 The imprisonment of judgment debtors in aid of execution of judgment has a long and fascinating legal history in England and Canada. (See C.R.B. Dunlop, Creditor-Debtor Law in Canada (2nd ed.)(Toronto: Carswell, 1995); P. Oliver, Terror to Evil-Doers, Prisons and Punishments in Nineteenth-Century Ontario (Toronto: Published for the Osgoode Society for Canadian Legal History by University of Toronto Press, 1998).
 As explained by Professor Dunlop, by the procedure known as capias ad respondendum, which has roots back to the thirteenth century, the sheriff was commanded to take (“capias”); i.e. arrest the debtor, and take him to jail until the case went to judgment and then to keep the debtor there until the debt was paid. In England there were debtors prisons. In Upper Canada, the debtors were part of the general prison population. In his text, Professor Oliver notes that in 1836, 2,304 inmates, including six women, (48%) of a prison population of 4,726 inmates, were debtors and not convicts.
60.11 (1) A contempt order to enforce an order requiring a person to do an act, other than the payment of money … may be obtained only on motion to a judge in the proceeding in which the order to be enforced was made.
 As observed by the Ontario Law Reform Commission in its Report on the Enforcement of Judgment Debts and Related Matters (Part I), supra, at p. 155, it is an essential requirement of an efficient enforcement system that the means and the financial affairs of the debtor should be fully known.
 Adopting a recommendation that had been made by the English Payne Committee in its Report of the Committee on the Enforcement of Judgment Debts (February 1969) (Cmnd, 3909), the Ontario Law Reform Commission recommended an elaborate questionnaire procedure as part of the judgment enforcement procedure.
 The recommendation of the Ontario Law Reform Commission, however, was not adopted by the Ontario Legislature or the Civil Rules Committee, but the idea of a directed disclosure of financial information has very sensibly been institutionalized as a part of family law proceedings for support and the equalization of family property in this province.
 In its former Rules of Court (Alberta Reg. 309/1968), the Province of Alberta did adopt a judgment debtor procedure under its former Rule 370.
35.09 For the purposes of determining the ability of an enforcement debtor to satisfy the claims of enforcement creditors, an enforcement creditor may require the enforcement debtor to provide information in accordance with this Part.
35.10 (1) An enforcement creditor may, on written notice to an enforcement debtor, require the enforcement debtor to provide to the enforcement creditor a financial report of the enforcement debtor verified by statutory declaration.
(2) Within 15 days from the day on which the enforcement debtor is served with a notice under subsection (1), the enforcement debtor must provide the enforcement debtor’s financial report to the enforcement creditor.
(3) Once an enforcement debtor has provided a financial report to an enforcement creditor under subsection (2), no enforcement creditor may, without an order of the Court, require the enforcement debtor to provide another financial report under subsection (1) until one year has expired from the day on which the enforcement debtor provided the previous financial report.
(4) Where an enforcement creditor has been provided with a financial report of an enforcement debtor under subsection (2), the enforcement creditor must, within 15 days of being provided with the financial report, register in the Personal Property Registry a status report for the writ indicating that the enforcement debtor has provided the enforcement creditor with the financial report.
(5) An enforcement creditor who has been provided with a financial report of an enforcement debtor under subsection (2) must, on a written request made by any other enforcement creditor of that enforcement debtor and the tendering of a fee of $25, provide to that other enforcement creditor a copy of that financial report.
 With the minuscule changes of changing the references from Alberta to Ontario, changing the title, and adding an email reference, Alberta’s Form 13 from its Civil Enforcement Regulation is attached as Schedule “A” to this Decision.
 It is not for me to decide whether the idea of a judgment debtor questionnaire should be adopted generally, which is a matter for the Legislature or the Civil Rules Committee, but the idea commends itself to me for the immediate case as a means to get the enforcement process initiated by the Greenbergs back on track and focused on its proper purposes, which is to determine whether Mr. Nowack has the financial resources to satisfy his numerous judgment debts in whole or in part. It is not the role of the civil judgment enforcement process to punish Mr. Nowack for any criminal conduct, which has yet to be proven in criminal court.
 I, therefore, order Mr. Nowak to complete the form attached as Schedule “A” within 30 days from the release of these Reasons for Decision. The Greenbergs may serve an appointment for a judgment debtor examination, as they may be advised, but the appointment should be scheduled after 30 days from the release of these Reasons for Decision.
 I do not doubt the correctness of Justice Morgan’s decision to find Mr. Nowack in contempt and to imprison him for his failure to comply with court orders. However, with respect to the orders that I have made, while Mr. Nowack has not been perfect in performance, his recent failures are not flagrant or contumelious. The judgment debtor process, however, has not been completed, and the above orders are designed to get the derailed or delayed enforcement process back on track.
 For the above reasons, I dismiss the contempt motion without costs. I discharge Mr. Nowack of any obligations under the Orders of Master Glustein, as he then was, Justice Firestone, Justice Brown, Justice Morgan, and myself, and I order: (1) that Mr. Nowack complete the attached Judgment Debtor Questionnaire within 30 days of the release of these Reasons for Decision; and (2) Mr. Nowack shall attend a continuation of his judgment debtor examination upon being served with an appointment by the Greenbergs, which appointment may be served by regular mail or email.
 The Greenbergs may take out an Order in accordance with this Decision without Mr. Nowack’s approval as to form and content.

References: v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v.