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Note: To assure payment of child and spousal support obligations which were in arrears, the trial court had ordered Husband to "provide an Irrevocable Letter of Credit in favour of the [Wife] in the amount of CA$150,000" in addition to providing security for costs. When the Husband did not obtain the letter of credit, it found him to be in contempt and sentenced him to forty five days in jail. Husband appealed. The Ontario Court of Appeal, in an opinion by Juriansz, J.A. with which Sharpe, J.A. concurred and Laskin, J.A., dissented, allowed the appeal.

Wife argued that an order to provide an LC was an exception to Canadian Civil Procedure Rule 60.11(1) which "removed the inherent jurisdiction of the court to use the contempt power to enforce an order for the payment of money". Moreover, Wife pointed out that Husband had failed to cure his contempt by complying with the order.

The appellate court observed that this case fell into an exception to the latter rule that an appeal will not be allowed unless the contempt is purged, namely where the party seeks to appeal the contempt order itself. It ruled that "the fact that [Husband] challenges the jurisdiction of the court to find him in contempt is reason enough to hear his appeal"

The appellate court considered the circumstances surrounding the order to provide the LC. It noted that Husband was at the time it was issued in arrears more than the amount of the LC and that there were no conditions imposed on when the LC would be drawn. It stated "[t]herefore, it appears that [Wife] could call on the letter as soon as it was received, if [Husband] had provided it."

The appellate court quoted from the leading Canadian LC case, Kingsway Electric Co. Ltd. v. 330604 Ontario Ltd. et al., (1979), 27 O.R. (2d) 541 (S.C.), "[t]hat a letter of credit has inherent value is clear from the fact that the irrevocable pledge to pay up to a face amount is sufficient to induce a third party to advance goods or services upon being made aware of the existence of the letter.... The letter of credit then becomes identical to cash to its full face value at the moment it is given." The appellate court concluded that a letter of credit would constitute a "payment of money" and "could not be enforced by contempt."

In dissent, Laskin, J.A., urged that the court had discretion and should exercise it in refusing to hear the appeal until the LC had been posted due to Husband's "flagrant and systematic disregard for orders of the court over a period of four years" especially given that the welfare of minors is involved.

With respect to the LC, the Judge agreed that that aspect of the order that required Husband to make support payments is an order to pay money that cannot be enforced by contempt. The Judge, however, observed that the purpose of the rule that a person cannot be jailed for failure to pay a civil debt related only to fixed monetary obligations such as debt owed to another person and not to payments into the court, to a solicitor, or to provide security. The Judge would have ruled that the order to post a LC was not a payment order within the meaning of the statute because it was not an order to pay money to the former Wife.

[JEB/jrw]

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