Decision clarifying pathway for interim release of civil contemnor closes ‘hole’ in the law: counsel

By Amanda Jerome

Law360 Canada (October 26, 2022, 9:33 AM EDT) -- A “hole in the law” has now been closed, counsel said, of a recent Ontario Court of Appeal decision which determined that the “proper procedural route for the release of a person serving a sentence for civil contempt is a stay of that civil order.”

Myles Anevich, an associate with Hicks Adams and duty counsel for the moving party, noted two takeaways from the decision: “One, it’s clarified the pathways for judicial interim release for a civil contemnor or someone who’s been convicted of civil contempt, which was a hole in the law that’s now been closed. And two, the principles that underlie how we approach seriousness and how we approach bail pending appeal generally, can also apply to the criminal context.”

Myles Anevich, Hicks Adams

Myles Anevich, Hicks Adams

“This case represents both an advancement in how one would approach civil contempt,” he said, “but also can help criminal appellate lawyers in trying to secure release for clients in the future.”

In Caja Paraguyaya De Jubilaciones Y Pensiones Del Personal De Itaipu Binacional v. Obregon, 2022 ONCA 724 the moving party, Antonio Duscio, sought “release from custody pending an appeal of his sentence” for civil contempt.

According to court documents, the contempt “relates to the dissipation of funds contrary to court orders” after Duscio was found “civilly liable for defrauding the responding party, a Paraguayan pension fund.”

Duscio, the court noted, was “sentenced to 16 months in jail without the possibility of parole,” but the sentence was “subject to the condition that he may be released at any point if he can demonstrate that he has purged his contempt.”

The court emphasized that this was Duscio’s “second sentence for contempt” in these proceedings, as he’d been originally sentenced “for a period of 12 months (with no restrictions on parole)” and then “found to have engaged in further acts of contempt while on parole” when he was released after serving seven months.

The first issue considered by Justice Lorne Sossin, writing for the Court of Appeal, was the “procedural avenue that applies where a person serving a sentence for civil contempt seeks release before an appeal of their sentence is heard.”

“Generally, bail pending an appeal is governed by s. 679 of the Criminal Code,” he explained, noting, however, that “civil contempt is not governed by the Code.”

He noted that Duscio is “subject to a warrant of committal pursuant to the Courts of Justice Act” and “r. 60.11 of the Rules of Civil Procedure.”

“Civil orders may be stayed by a court on its own initiative or on motion by any person, whether or not a party, pursuant to s. 106 of the Courts of Justice Act. Rule 63.02(1) further provides that an interlocutory or final order may be stayed by a judge of the court to which a motion for leave to appeal has been made or to which an appeal has been taken,” he added, before reviewing the relevant case law.

“In this case,” the court noted that both parties “approached this matter principally as an application for bail pending appeal under s. 679 of the Criminal Code, and governed by the principles set out in R. v. Oland, 2017 SCC 17.”

In Justice Sossin’s view, the “proper procedural route for the release of a person serving a sentence for civil contempt is a stay of that civil order.”

The Court of Appeal, he noted, “confirmed” in Kopaniak v. MacLellan (2002), 159 O.A.C. 37 (C.A.) that the “Rules of Civil Procedure govern civil contempt proceedings.”

“Similarly,” he added, the Alberta Court of Appeal in DM v. WS, 2019 ABCA 422 “applied its civil rules and the RJR-MacDonald test to adjudicate a request to stay a civil contempt order pending appeal.”

Justice Sossin explained that the “application of the RJR-MacDonald factors to determine whether a stay is warranted, of course, may be informed by the principles underlying applications for bail pending appeal as outlined in cases such as Oland” and that this approach is “consistent both with the case law and the statutory regimes governing civil contempt and criminal offences.”

The judge went on to note that there are “three characteristics of sentences for civil contempt that distinguish them from sentences for criminal convictions.”

“First, a sentence for civil contempt is not purely penal. It is intended to incent compliance with court orders and the purging of contempt. The second, related distinction is that a sentence for civil contempt generally will end once the contempt is purged.” And “Third, civil contempt does not involve the Crown (unless it is party to a civil dispute) and therefore the court will not normally have the benefit of submissions by the Crown on issues relating to the public interest,” he added, noting that these “distinctions mean that, while relevant, the Oland principles will not be determinative of a stay motion involving a sentence for civil contempt.”

The court also noted that “Neither the Courts of Justice Act nor the Rules of Civil Procedure provide any specific direction on appealing a warrant of committal for civil contempt.”

Turning to the application of the stay framework, Justice Sossin explained the three parts of the RJR-MacDonald test as: “a) Is there a serious issue to be determined? b) Will the failure to grant the stay result in irreparable harm to the moving party? and, c) Where does the balance of convenience lie?”

The “first prong of the RJR-MacDonald framework is straightforward,” the judge determined in this case, noting that Duscio “raises a serious issue on appeal.”

Duscio's position, he explained, is that “the sentence imposed was disproportionate, and that, following the Supreme Court of Canada’s decision” in R. v. Bissonnette, 2022 SCC 23 “any sentence which precludes eligibility for parole violates the Canadian Charter of Rights and Freedoms.”

“This ground of appeal also would easily meet the threshold of ‘sufficient merit’ pursuant to s. 679(4)(a) of the Code,” the judge added.

On the second prong, Justice Sossin did not “view irreparable harm due to continuing detention as applicable in a setting where an individual may end his detention at any time by purging his contempt.”

Turning to the third prong, Justice Sossin emphasized that “Even if continuing detention did constitute irreparable harm, however, the balance of convenience in this case does not favour granting a stay.”

“The seriousness of the moving party’s disregard for court orders must be considered at this stage of the analysis,” he wrote, noting that Duscio was “found liable for defrauding the responding party of over $7 million.”

“With respect to the balance of convenience, a stay pending appeal, even a brief one, would frustrate the purposes of the court’s response to the moving party’s contempt by allowing him the opportunity to continue actively disregarding the court’s orders,” Justice Sossin added, determining that the “balance of convenience does not favour granting the stay sought in these circumstances.”

The court also noted that the “Oland factors for bail pending appeal relating to the public interest may also inform the balance of convenience prong of the RJR-MacDonald framework.”

However, Justice Sossin found that “it would be unacceptable to a reasonably informed member of the public to permit a person who has shown such ongoing and flagrant disregard for the administration of justice to be released pending appeal.”

Therefore, in a decision released Oct. 19, Justice Sossin granted the application for leave to appeal sentence but dismissed the motion for release pending appeal.

In an interview with The Lawyer’s Daily, Anevich said the case is an “outlier” and raises some “fascinating issues.”

He noted that Justice Sossin’s decision draws a “bright line” that “all civil contempts follow the RJR-McDonald test. But the principles underlying bail pending appeal animate how the test is applied in cases of civil contempt when we’re dealing with a custodial sentence.”

Anevich also highlighted the court’s take on “whether an imposition of a period of parole ineligibility is inappropriate in light of Bissonnette.”

“The wording of Bissonnette could be applied to say that the imposition of parole ineligibility is the type of sentence that is incompatible with our justice system. And really, civil contempt, as far as I’m aware, is the only sentence in which a judge can deny parole eligibility,” he said, noting that “even dangerous offenders who are the worst of the worst become eligible for parole after seven years.”

“The argument that I think Mr. Duscio should make on appeal is that Bissonnette makes Chiang [Chiang (Trustee of) v. Chiang, 2007 ONCA 529] not good law any longer,” he added.

John De Vellis, Shibley Righton LLP

John De Vellis, Shibley Righton LLP

John De Vellis, a partner at Shibley Righton LLP and counsel for the responding party with Jacqueline King, said the “main takeaway” from this decision is that the “test for seeking interim release pending an appeal on a contempt motion has been clarified.”

“It’s pretty definitive now. The test is a stay under the Rules of Civil Procedure. It’s basically an RJR-McDonald test, albeit informed by principles you may see in cases such as Oland,” he explained, noting the decision as “significant.”

The other key takeaway De Vellis highlighted was Justice Sossin “distinguishing Criminal Code cases from contempt.”

“Essentially, the feeling I get from the decision is contempt is not a Criminal Code offence,” he said, noting that the decision emphasized the public interest criteria of the balance of convenience test.

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