Court File and Parties

Court File No.: CV-21-00664307-0000 Date: 2023-09-25 Superior Court of Justice - Ontario

Re: JCCKS Capital Corp. and Conceicao Ferreira, as Estate Trustee for the Estate of Jose Luis Ferreira, Plaintiffs And: 2523039 Ontario Inc., Luis De Pessoa, also known as Luis Pessoa, also known as Luis De Sa Pessoa, also known as Luis Sa Pessoa, also known as Luis F De Sa Pessoa, also known as Luis Ferreira Pessoa and IPB Realty & Finance Inc., Defendants

Before: Vermette J.

Counsel: Sarah Rustomji, for the Plaintiffs Allen Wilford, for the Defendants 2523039 Ontario Inc. and Luis De Pessoa

Heard: September 5, 2023

Endorsement

[1] The Plaintiff JCCKS Capital Corp. (“JCCKS”) moves for an Order declaring that the Defendant 2523039 Ontario Inc. (“252 Ontario”) has breached the Order of Associate Justice Jolley dated November 30, 2021 (“Deposit Order”), and that it is in contempt of court as a result of its breach of the Deposit Order.

[2] I am satisfied beyond a reasonable doubt that 252 Ontario has intentionally failed to do what it was compelled to do under two paragraphs of the Deposit Order. Therefore, I find that 252 Ontario is in contempt of court. The question of the proper penalty for 252 Ontario’s contempt of court will be addressed at a second hearing.

A. FACTUAL BACKGROUND

1. The parties and the action

[3] JCCKS is a corporation incorporated pursuant to the laws of Ontario. Carlos Ferreira, who swore affidavits in support of JCCKS’s position on this motion, is an officer and director of JCCKS.

[4] 252 Ontario is a corporation incorporated pursuant to the laws of Ontario. The Defendant Luis De Pessoa (also known as Luis Pessoa, Luis De Sa Pessoa, Luis Sa Pessoa, Luis F De Sa Pessoa, and Luis Ferrera Pessoa) (“Mr. De Pessoa”) is the sole shareholder, officer and director of 252 Ontario. Mr. De Pessoa was a registered mortgage broker and financial advisor.

[5] The Plaintiffs commenced this action on June 18, 2021. Among other things, JCCKS seeks the following relief as against 252 Ontario:

a. damages in the amount of $345,922.81 for breach of contract, wrongful conversion of funds and fraudulent misrepresentation;

b. a declaration that 252 Ontario’s interest in the charge registered in the Land Registry Office on April 3, 2018[^1] as Instrument Number WR1105196 (“252 Ontario Mortgage”) against the property known municipally as 15 Norfolk Avenue, Cambridge, Ontario (“Norfolk Property”) is subject to the amount owed by 252 Ontario to JCCKS in the amount of $130,000.00 plus interest;

c. a declaration that 252 Ontario holds the 252 Ontario Mortgage on a resulting and/or constructive trust on behalf of JCCKS as beneficiary and an Order vesting the 252 Ontario Mortgage in JCCKS;

d. an Order that there be no dealings with the 252 Ontario Mortgage without JCCKS’s consent or further Order of this Court, including any discharge, assignment, encumbrance or transfer of charge; and

e. an Order granting JCCKS leave to have a certificate of pending litigation issued with respect to the 252 Ontario Mortgage.

[6] The Charge/Mortgage registered on title with respect to the 252 Ontario Mortgage states that the principal was $170,000.00, the interest rate was 12.0% per annum, and the balance due date was March 29, 2019. The “Additional Provisions” section contains the following statement: “Interest: Due on each advance, pre paid in full.”

[7] On May 3, 2021, JCCKS registered a caution against title to the 252 Ontario Mortgage. The caution expired on July 3, 2021.

2. 252 Ontario’s action against the Mortgagors

[8] On August 19, 2021, 252 Ontario commenced an action against the owners of the Norfolk Property, Orlando Matias and Dina Sousa (“Mortgagors”), for amounts owing under the 252 Ontario Mortgage. 252 Ontario claimed the following against the Mortgagors:

a. payment of the amount of $50,234.08, plus applicable legal costs, due under covenants contained in the 252 Ontario Mortgage;

b. possession of the mortgaged premises;

c. interest at the rate of 8.99% per annum, calculated monthly, not in advance, on the sum of $50,234.08, plus applicable legal costs, from July 20, 2021 to the date of judgment; and

d. post-judgment interest at the rate of 8.99% per annum, calculated monthly, not in advance, until payment in full is received.

[9] In its Statement of Claim, 252 Ontario alleged that the amount due under the 252 Ontario Mortgage was as follows:

Principal balance as at July 1, 2021 $50,000.00 (per statement dated July 19, 2021)

Interest to July 20, 2021 (19 days at 8.99% / $12.32 per day) $ 234.08

Balance due and owing as at July 20, 2021 $50,234.08

[10] On August 26, 2021, 252 Ontario issued a Notice of Sale Under Charge. The Notice stated that the balance outstanding as at August 25, 2021 was $57,168.42. This amount included various charges and costs, as well as the following:

Principal balance as at July 20, 2021 $50,234.08 (As per Statement of Claim issued on August 19, 2021)

Accrued interest to August 25, 2021 $ 445.32 (36 days at 8.99% / $12.37 per day) $50,679.40

[11] 252 Ontario obtained default judgment against the Mortgagors on October 19, 2021. The default judgment orders that:

a. the Mortgagors pay to 252 Ontario the sum of $51,223.68 and the costs of the action, together with interest pursuant to the 252 Ontario Mortgage, to be assessed;

b. the Mortgagors deliver to 252 Ontario possession of the Norfolk Property; and

c. the judgment bears interest at the rate of 8.99% per year from October 19, 2021.

[12] On October 19, 2021, 252 Ontario filed a writ against the Mortgagors for the sum of $51,223.68 plus interest at a rate of 8.99%.

3. The Deposit Order

[13] JCCKS subsequently brought a motion for leave to register a Certificate of Pending Litigation on title to the Norfolk Property, on notice to the Defendants and the Mortgagors. The motion was returnable on November 30, 2021, but it did not proceed on that date because the parties reached an agreement prior to the motion being heard.

[14] On November 30, 2021, Associate Justice Jolley made the Deposit Order on consent of JCCKS, 252 Ontario and Mr. De Pessoa. A formal Consent was signed by the lawyers for these parties. The Deposit Order provides as follows:

1. THIS COURT ORDERS that upon the sale of the property legally described as: LT 168 PL 225 CAMBRIDGE; Cambridge, bearing PIN# 03810-0322 (LT) and known municipally as 15 Norfolk Avenue, Cambridge, Ontario, NIR 3T5 (the “Norfolk Property”) the Defendant, 252 Ontario, shall direct that the sum of the amounts owing under the charge/mortgage registered in the Land Registry Office on April 3, 2018 as Instrument Number WR1105196 against the Norfolk Property (the “252 Ontario Mortgage”), being the amount of $50,679.40 plus interest accrued to the date of the sale of the Norfolk Property, or a lesser amount to be determined and if agreed upon by 252 Ontario and JCCKS prior to the closing of the sale of the Norfolk Property, to be paid to the trust account of Allen Wilford of A. Wilford Professional Corporation, where these amounts shall remain and shall not be removed, dissipated, alienated or similarly dealt with, without an agreement between 252 Ontario Inc. and JCCKS or a further Order of the Court.

2. THIS COURT ORDERS that within thirty (30) days of the date of this Order, 252 Ontario will provide to JCCKS an accounting of all amounts paid under the 252 Ontario Mortgage and received by 252 Ontario from April 3, 2018 up until the date of this Order.

3. THIS COURT ORDERS that upon closing of the sale of the Norfolk Property, 252 Ontario shall provide JCCKS with a copy of proof of the amounts received in connection with the sale of the Norfolk Property, including all evidence in the possession or control of 252 Ontario of the amount received from the closing of the Norfolk Property, which shall include, but is not limited to, a copy of the purchase agreement, a copy of the Statement of Adjustments, copies of wire confirmation or a copy of a certified cheque or bank draft from the purchaser’s solicitor, and a copy of the discharge statements.

4. THIS COURT ORDERES [sic] that 252 Ontario shall provide JCCKS with confirmation that the amounts in respect of the 252 Ontario Mortgage have been paid into the trust account of Allen Wilford of A. Wilford Professional Corporation upon the sale of the Norfolk Property.

5. THIS COURT ORDERS that 252 Ontario shall not dispose, discharge, encumber, transfer, assign or similarly deal with the 252 Ontario Mortgage pending the sale of the Norfolk Property.

6. THIS COURT ORDERS that any payment made towards the 252 Ontario Mortgage, including payments made by the mortgagor towards the 252 Ontario Mortgage, from the date of this Order shall be paid into the trust account of Allen Wilford of A. Wilford Professional Corporation.

7. THIS COURT ORDERS that there shall be no costs payable on this Motion.

[15] At 7:29 a.m. on November 30, 2021, presumably before the Deposit Order was signed, Mr. De Pessoa sent an e-mail to his real estate lawyer, Terry Walman of Walman Catre & Stone, and to his litigation lawyer in this action, Allen Wilford, with the following subject line: “PRINCIPAL BALANCE OWING ON MY 2ND MORTGAGE 50K AGAINST NORFOLK PROPERTY NOW PAID DOWN TO $18,000.00”. The e-mail reads as follows (“November 30, 2021 E-mail”):

Please update your records accordingly everyone

May 2020 $4,000.00 June 2020 $4,000.00

July 2021 $4,000.00 Aug 2021 $4,000.00 Sep 2021 $4,000.00 Oct 2021 $4,000.00 Nov 2021 $8,000.00

Total : $32,000.00

Balance outstanding is $18,000.00

[16] Despite the November 30, 2021 E-mail, no changes were made to the amount included in paragraph 1 of the Deposit Order that was said to be the amount owing under the 252 Ontario Mortgage (i.e., $50,679.40, which was the amount included in the Notice of Sale Under Charge dated August 26, 2021).

[17] On December 22, 2021, Mr. Wilford’s law clerk, Melanie Baker, sent a copy of the issued Deposit Order to Mr. De Pessoa by e-mail.

[18] 252 Ontario did not provide to JCCKS by December 30, 2021 an accounting of all amounts paid under the 252 Ontario Mortgage and received by 252 Ontario from April 3, 2018 up until November 31, 2021, as required by paragraph 2 of the Deposit Order. Counsel for the Plaintiffs unsuccessfully wrote to Mr. Wilford many times to request the accounting ordered in the Deposit Order, including on January 12, June 20, July 18, July 27 and September 9, 2022.

[19] On January 12, 2022, Mr. De Pessoa sent an e-mail to Mr. Wilford and Ms. Baker. The e-mail’s subject line was the court file number and the title of proceeding of this action. Mr. De Pessoa stated the following in his e-mail:

Hello Melanie, Ana and Matias from Cambridge [i.e., the Mortgagors] have sent me $4,000.00 to further knock down against the principal balance remaining of $18,000.00 such that the remaining owing balance is now only $14,000.00

I understand as per court order that I am to forward this amount to you so kindly send a void cheque so I can deposit tomorrow to your trust account madam

[20] Mr. De Pessoa states the following in his affidavit regarding the payments that he received from the Mortgagors after the date of the Deposit Order, i.e., November 30, 2021:

Back in February 2022 I provided Mr. Wilford’s Real Estate Clerk, with a bank draft for $12,000.00, which was a further 3 principal payments of $4.000.00. I was told from Mr. Wilford’s Real Estate Clerk and verily believe it to be true that the bank draft was not required. I now only find out that she had did [sic] not understand the reasoning for the bank draft until after the fact.

[21] I note that in addition to making numerous requests for the accounting ordered in paragraph 2 of the Deposit Order, counsel for the Plaintiffs also made numerous requests for confirmation that any payments made towards the 252 Ontario Mortgage after November 30, 2021 had been paid into Mr. Wilford’s trust account, in accordance with paragraph 6 of the Deposit Order. Such requests were made on June 20, July 18, July 28, September 9 and September 21, 2022, among others. These requests remained without response, like the requests for the court-ordered accounting.

4. Sale of the Norfolk Property

[22] The Norfolk Property was listed for sale in 2022. The Mortgagors entered into an Agreement of Purchase and Sale in early May 2022. The sale transaction closed on August 5, 2022.

[23] The record before me includes an “Indicative Discharge Request Document” dated March 18, 2022 that appears to be signed by Mr. De Pessoa on behalf of 252 Ontario. This document contains the following information:

a. Principal amount fully advanced, inclusive of 12 months of pre-paid interest: $50,000.

b. Eleven payments of $4,000 received on account of the principal: $44,000.

c. Seven interest payments of $500 owing but waived: $0.

d. Principal amount owing: $6,000.

e. Total owing (not inclusive of legal and discharge fees): $6,000.

[24] In preparation for the closing of the purchase and sale transaction, Mr. Walman prepared a discharge statement dated July 25, 2022 on behalf of 252 Ontario. The discharge statement indicated that the balance as at July 28, 2022 was $6,000.00. In an e-mail dated July 28, 2022, the lawyer for the Mortgagors pointed out to Mr. Walman that he had failed to account for all payments made towards the 252 Ontario Mortgage. The Mortgagors’ lawyer stated that the e-transfer confirmations for the following payments made towards the 252 Ontario Mortgage were attached to his e-mail: (a) $4,000 on May 11, 2022; (b) $4,000 on June 8, 2022; and (c) $4,000 on July 5, 2022. The attachments were not included in the record before me.

[25] Prior to the closing of the transaction, Terry Walman sent a revised discharge statement to the Mortgagors’ lawyers dated August 5, 2022 which stated that the balance was $6,000.00, and that the total payable to discharge the 252 Ontario Mortgage was $16,265.71, composed of the following:

Balance as at July 28, 2022 $6,000.00

Legal fees default matters / default proceedings $6,380.00

Legal disbursements inclusive of and H.S. T [sic] $1,185.71

Statement Fee – July 25, 202 $ 350.00 Statement Fee – August 5, 2022 $ 350.00

Legal Costs – discharge matters inclusive of $2,000.00 disbursements and H.S.T.

[26] Upon closing, i.e. on August 5, 2022, the sum of $16,265.71 was deposited to the trust account of A. Wilford Professional Corporation.

5. Motion for contempt returnable on July 7, 2023

[27] In October 2022, JCCKS brought a contempt motion against 252 Ontario. The motion was scheduled to be heard on July 7, 2023.

[28] The motion came before me on July 7, 2023. Only counsel for the Plaintiffs was present. I adjourned the motion to September 5, 2023 as a result of service issues. I ordered Mr. De Pessoa to be present in person at the hearing on September 5, 2023. My endorsement stressed the serious consequences and penalties that could flow from a finding of contempt and included the following paragraphs, among others:

Based on the evidence before me, I am satisfied that Mr. De Pessoa is aware of the [Deposit Order] and the motion for contempt. However, no responding materials have been filed and Mr. Wilford did not appear before the Court today. While there is no evidence before me on this point, Mr. De Pessoa may be having health issues. On May 22, 2023, Mr. Wilford advised counsel for the Plaintiffs that Mr. De Pessoa was in Europe waiting to have an MRI on his head. Counsel for the Plaintiffs did not receive any further information as to whether Mr. De Pessoa was back in Canada or still in Europe. On June 2, 2023, Mr. Wilford sent an e-mail to counsel for the Plaintiffs, copied on Mr. De Pessoa, stating that Mr. De Pessoa had told him that he was considering not opposing the motion.

I wish to alert Mr. Wilford and Mr. De Pessoa that any alleged health issues will not be considered by me on September 5, 2023 unless they are supported by proper evidence.

6. Subsequent efforts by 252 Ontario and Mr. De Pessoa to comply with the Deposit Order

[29] On August 10, 2023, Mr. De Pessoa’s wife deposited $12,000.00 to Mr. Wilford’s trust account.

[30] On August 10, 2023, Ms. Baker sent the following e-mail to the Plaintiffs’ lawyer:

Pursuant to paragraph 2 of the Court Order dated Nov 30/23 [sic], this will confirm that I have provided you with a list of payments our client received on behalf of 252 prior to and up to the date of the Order on Aug 9, 2023.

With respect to parapgrah [sic] 3 of the order, I can advise that I have requested a copy of the closing report from Mr. Walman and upon receipt same will be provided to you.

With respect to paragraphs 4 and 6 of the Order, I can confirm that we have $18,000.00 held in Trust, which represents payments 252 received relating to the Norfolk property.

Once we have complied with the Order, is your Motion still necessary?

[31] The e-mail that Ms. Baker said she sent on August 9, 2023 is attached to the affidavit sworn by Mr. De Pessoa on this motion, but it simply states “Please see the attached.” The attachment to Ms. Baker’s e-mail is not included in the record before me. Mr. De Pessoa states in his affidavit that the November 30, 2021 E-mail was attached to the e-mail sent by Ms. Baker on August 9, 2023.

[32] On August 25, 2023, Ms. Baker sent the following e-mail to court staff:

Our client, Luis Pessoa Director of 253039 Ontario Ltd. [sic] (Defendants) was in a motor vehicle accident in Portugal, causing a fracture to his skull. He is still in Portugal.

Mr. Pessoa is currently receiving medical care and treatment, and is being monitored and has been prescribed medication. Mr. Pessoa has also undergone MRI’s and is waiting to meet with the neurosurgeon for the latest results. Until the medical professionals in Portugal can guarantee Mr. Pessoa that his condition is stable, he cannot leave Portugal.

Justice Vermette has ordered that Mr. Pessoa attend in person on September 5, 2023. Given that Mr. Pessoa is in Portugal receiving medical care, Mr. Wilford is seeking permission for he and our client attend court on September 5, 2023 by zoom.

Would you kindly bring this request to Justice Vermette’s attention and advise thereafter.

[33] I note that the record before me includes other general and undetailed references to Mr. De Pessoa being involved in a motor vehicle accident in Portugal. On September 19, 2022 (i.e., almost one year before the e-mail above), Ms. Baker sent an e-mail to the Plaintiffs’ counsel in which she stated that Mr. De Pessoa had sustained a head injury in a motor vehicle accident in Portugal for which he was receiving medical attention. Ms. Baker also stated that because of Mr. De Pessoa’s medical condition and the fact that he was out of the country, he was not going to be able to provide his affidavit of documents by the end of September 2022, but once he had clearance to travel, he would be back at his earliest opportunity and gather the documents for his affidavit of documents. In addition, as stated in my endorsement dated July 7, 2023, Mr. Wilford advised counsel for the Plaintiffs on May 22, 2023 (i.e., three months before Ms. Baker’s e-mail to court staff) that Mr. De Pessoa was in Europe waiting to have an MRI on his head.

[34] My assistant responded as follows to Ms. Baker’s e-mail dated August 25, 2023:

Pursuant to Justice Vermette’s Endorsement of July 7, 2023 in which Her Honour states the following: “I wish to alert Mr. Wilford and Mr. De Pessoa that any alleged health issues will not be considered by me on September 5, 2023 unless they are supported by proper evidence.”, please be advised that Ms. Baker’s email does not constitute proper evidence. I have included Her Honour’s Endorsement for ease of reference.

Thank you.

[35] On August 28, 2023, within a few days of my assistant’s response, Mr. De Pessoa swore an affidavit in response to the contempt motion. His affidavit attaches several documents. While the affidavit indicates that Mr. De Pessoa was in the City of Braga in Portugal when the affidavit was sworn, the affidavit contains no evidence regarding any health issues and no explanation as to why Mr. De Pessoa would still be in Portugal more than one year after being involved in a motor vehicle accident there. Mr. De Pessoa was obviously sufficiently well to review JCCKS’s motion materials and provide his response.

[36] On August 28, 2023, Ms. Baker sent the following e-mail to the Plaintiffs’ lawyer:

My apologies, I thought this was sent a week or so ago.

In accordance with paragraph 3 of the November 30, 2021 Order, please find enclosed the following documents that are in Mr. Pessoa’s/252’s possession and control:

1. Walman Catre & Stone Ledger Statement dated August 8, 2022 with copy of cheque payable to Canadice Capital.

2. Discharge Statements dated July 19, 2022 1) from Lender 2523039 Ontario Inc. relating to the Second Mortgage Charge on 15 Norfolk in the amount of $50,000 and 2) from Lender Candice Capital Inc. re First Mortgage Charge in the amount of $530,000.

3. Walman Catre & Stone Discharge Statement dated August 5, 2022 re Default Proceedings relating to 2523039 and Matias et al..

4. Copy of Certified Cheque from Milad Haghani Professional Corporation o/a Haghani Law Office to A Wilford Professional Corporation in the amount of $16,265.71.

What is not in Mr. Pessoa’s or 252’s possession or control are the following documents:

1. Purchase and Sale Agreement.

2. Statement of Adjustments.

3. Copy of wire /bank draft or certified cheque from Purchaser to Vendor.

4. Any and all other documents associated directly between the vendor and the purchaser.

5. Vendor’s closing package.

With respect to para 4 of the Order, I can confirm that we have in our Trust Account the sum of $28,265.71 representing $12,000 from Mr. Pessoa for payments received before the Order and $6,000 received from Mr. Walman.

[37] Ms. Baker stated in a subsequent e-mail that she had asked the Mortgagors’ lawyer for a copy of his closing package to his clients, but he had yet to receive his clients’ authorization to provide her with any documentation.

[38] On August 30, 2023, Ms. Baker sent the following e-mail to the Plaintiffs’ lawyer:

I can confirm that we received the $12,000 (3 payments of $4,000) from Luis Pessoa on August 10/2023 and is in our Trust Account along with the $6,000 from Walman Catre & Stone when the sale transaction closed in August 2022. Total amount in Trust is $18,000.00.

Our Real Estate Clerk was not aware of the court order and the $12,000 to be deposited to our account hence the delay in receiving funds.

[39] This matter came back before me on September 5, 2023. Mr. Wilford and counsel for the Plaintiffs were present, but Mr. De Pessoa was not, contrary to the order I made on July 7, 2023. Mr. Wilford advised the Court that Mr. De Pessoa’s wife and son were present in the courtroom.

B. DISCUSSION

1. Legal principles applicable to civil contempt

[40] Civil contempt has three elements that must be established beyond a reasonable doubt:

a. The order alleged to have been breached must state clearly and unequivocally what should and should not be done. An order may be found to be unclear if, for example, it is missing an essential detail about where, when or to whom it applies; if it incorporates overly broad language; or if external circumstances have obscured its meaning.

b. The party alleged to have breached the order must have had actual knowledge of it.

c. 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. The question is not whether the alleged contemnor willfully and deliberately disobeyed the relevant order. Rather, what is required is an intentional act or omission that breaches the order. The required intention relates to the act itself, not to the disobedience.

See Carey v. Laiken, 2015 SCC 17 at paras. 32-35, 38 (“Carey”) and Greenberg v. Nowack, 2016 ONCA 949 at paras. 25-27 (“Greenberg”).

[41] A judge has discretion to decline to make a contempt finding where the three-part test has been met but where it would be unjust to do so, such as where the alleged contemnor has acted in good faith to take reasonable steps to comply with the relevant court order: see Carey at para. 37 and Greenberg at para. 26.

[42] There is a preliminary issue in this case as to whether this Court’s contempt power can be used. Rule 61.11(1) of the Rules of Civil Procedure states:

A contempt order to enforce an order requiring a person to do an act, other than the payment of money, or to abstain from doing an act, may be obtained only on motion to a judge in the proceeding in which the order to be enforced was made. [Emphasis added.]

[43] The purpose of the exception in rule 60.11(1) with respect to the payment of money is to exclude the use of the contempt power for fixed monetary obligations, that is, debts, between a debtor and a creditor: see Dickie v. Dickie, 2006 CanLII 576 at para. 103 (Ont. C.A.) (“Dickie”). In Dickie, Laskin J.A. stated the following at para. 104:

[T]o determine whether an order is an order for the payment of money under rule 60.11(1), one must consider to whom the money is being paid and the effect of the order for payment. Where money is ordered to be paid not to the creditor but into court – or its functional equivalent, to a solicitor to be held in trust – and where the effect of the order is not to create a fixed debt obligation but to secure a debt obligation, then the order is not an order for the payment of money under rule 60.11(1).

[44] While Justice Laskin dissented in the Court of Appeal, the Supreme Court of Canada allowed the appeal on the issue of contempt and stated that it was in substantial agreement with Laskin J.A.’s reasons: see Dickie v. Dickie, 2007 SCC 8 at para. 7.

[45] Based on the excerpt from Dickie above, the provisions in the Deposit Order that money be paid into Mr. Wilford’s trust account do not constitute an order for the payment of money under Rule 60.11(1). Therefore, it is possible to make a contempt order for the failure to make these payments.

2. Application to this case

[46] It is JCCKS’s position that 252 Ontario breached paragraphs 1, 2, 4 and 6 of the Deposit Order. I will discuss each paragraph in turn. Before doing so, I note that it is clear that 252 Ontario, through Mr. De Pessoa, had actual knowledge of the Deposit Order. Both 252 Ontario and Mr. De Pessoa consented to the Deposit Order through their lawyer, Mr. Wilford. Further, Mr. De Pessoa received a copy of the issued Deposit Order by e-mail on December 22, 2021, and he referred to the terms of the Deposit Order in an e-mail that he sent to Ms. Baker and Mr. Wilford on January 12, 2022. Therefore, I find that the second element of the test for civil contempt is met beyond a reasonable doubt.

[47] Paragraph 1. For ease of reference, I reproduce again paragraph 1 of the Deposit Order:

THIS COURT ORDERS that upon the sale of the property legally described as: LT 168 PL 225 CAMBRIDGE; Cambridge, bearing PIN# 03810-0322 (LT) and known municipally as 15 Norfolk Avenue, Cambridge, Ontario, NIR 3T5 (the “Norfolk Property”) the Defendant, 252 Ontario, shall direct that the sum of the amounts owing under the charge/mortgage registered in the Land Registry Office on April 3, 2018 as Instrument Number WR1105196 against the Norfolk Property (the “252 Ontario Mortgage”), being the amount of $50,679.40 plus interest accrued to the date of the sale of the Norfolk Property, or a lesser amount to be determined and if agreed upon by 252 Ontario and JCCKS prior to the closing of the sale of the Norfolk Property, to be paid to the trust account of Allen Wilford of A. Wilford Professional Corporation, where these amounts shall remain and shall not be removed, dissipated, alienated or similarly dealt with, without an agreement between 252 Ontario Inc. and JCCKS or a further Order of the Court.

[48] I decline to make a finding of contempt with respect to paragraph 1 of the Deposit Order because it is not sufficiently clear and unequivocal. In my view, the intention of paragraph 1 is to order 252 Ontario to direct that the amount owing under the 252 Ontario Mortgage at the time of the sale of the Norfolk Property be paid into the trust account of Mr. Wilford. While the paragraph goes on and states that the amount that was owing at the time of the order was $50,679.40, I am not satisfied beyond a reasonable doubt that this was in fact the case. The record suggests that poor lawyering may have been involved and that the wrong amount may have been included in the Deposit Order and in other documents (i.e., in the action against the Mortgagors).

[49] If, in fact, the amount owing was not $50,679.40, 252 Ontario did not have the ability to direct that $50,679.40 be paid to anyone upon the sale of the Norfolk Property. 252 Ontario was not the seller of the Norfolk Property and, as the mortgagee, it could only direct that the actual amount owing under the 252 Ontario Mortgage be paid to it or in accordance with its direction. While it is true that 252 Ontario did not seek JCCKS’s agreement to direct that a lesser amount be paid into Mr. Wilford’s trust account, the amount that 252 Ontario could legitimately direct to be paid into Mr. Wilford’s trust account at the time of the sale of the Norfolk Property could not depend on whether JCCKS agreed to that particular amount. 252 Ontario could only direct the payment of the amount that was owing at the time of the sale, whether JCCKS agreed to it or not.[^2]

[50] I also decline to make a finding of contempt in relation to the fact that after receiving $16,265.71 following the sale the Norfolk Property, Mr. Wilford may have only kept $6,000 of that amount in his trust account and may have transferred the balance to Mr. Walman.[^3] The discharge statement dated August 5, 2022 (reproduced in paragraph 25 above) shows that the balance owing at the time of the sale was $6,000 and that various other fees and costs were charged to the Mortgagors, including Mr. Walman’s fees with respect to the sale transaction. I am not satisfied beyond a reasonable doubt that the sum of $10,265.71 that may have been transferred out of Mr. Wilford’s trust account represents an amount owing under the 252 Ontario Mortgage which had to remain in Mr. Wilford’s trust account pursuant to paragraph 1 of the Deposit Order.

[51] Paragraph 2. For ease of reference, I reproduce again paragraph 2 of the Deposit Order:

THIS COURT ORDERS that within thirty (30) days of the date of this Order, 252 Ontario will provide to JCCKS an accounting of all amounts paid under the 252 Ontario Mortgage and received by 252 Ontario from April 3, 2018 up until the date of this Order.

[52] I am satisfied beyond a reasonable doubt that 252 Ontario intentionally failed to do what it was required to do under this paragraph. In my view, the meaning of this paragraph is clear and unequivocal, and 252 Ontario intentionally omitted to do what it was ordered to do. 252 Ontario did not provide an accounting within 30 days of the Deposit Order. Despite multiple requests after the expiry of the 30 days, it still failed to provide an accounting. On August 9, 2023, 252 Ontario purported to provide an “accounting” by having Ms. Baker forward the November 30, 2021 E-mail to the Plaintiffs’ lawyers. However, the “accounting” set out in the November 30, 2021 does not constitute an accounting in any sense of the word and, in any event, it does not comply with the express terms of paragraph 2 of the Deposit Order. The November 30, 2021 E-mail does not start on April 3, 2018, as required by paragraph 2 of the Deposit Order, and it does not include any information regarding the amounts paid by 252 Ontario to the Mortgagors under the 252 Ontario Mortgage.

[53] Paragraph 4. For ease of reference, I reproduce again paragraph 4 of the Deposit Order:

THIS COURT ORDERES [sic] that 252 Ontario shall provide JCCKS with confirmation that the amounts in respect of the 252 Ontario Mortgage have been paid into the trust account of Allen Wilford of A. Wilford Professional Corporation upon the sale of the Norfolk Property.

[54] I am not satisfied beyond a reasonable doubt that 252 Ontario intentionally failed to do what it was required to do under this paragraph. Before it brought its contempt motion, JCCKS knew that $16,265.71 had been transferred to Mr. Wilford’s trust account upon the sale of the Norfolk Property. The affidavit of Carlos Ferreira sworn October 31, 2022 attaches copies of the cheque in the amount of $16,265.71 to “A. Wilford Professional Corporation in Trust” and the deposit slip confirming that this amount was deposited into Mr. Wilford’s trust account on August 5, 2022. Mr. Ferreira does not state in his affidavit who provided him with a copy of these documents and when. Thus, JCCKS has failed to establish that confirmation was not provided in accordance with paragraph 4 of the Deposit Order. While it is 252 Ontario’s position that, out of the $16,265.71, only $6,000 was paid into Mr. Wilford’s trust account “in respect of the 252 Ontario Mortgage”, and while this information was not clearly communicated to JCCKS until late August 2023, it is not clear and unequivocal that paragraph 4 of the Deposit Order required 252 Ontario to convey this specific information to JCCKS.

[55] Paragraph 6. For ease of reference, I reproduce again paragraph 6 of the Deposit Order:

THIS COURT ORDERS that any payment made towards the 252 Ontario Mortgage, including payments made by the mortgagor towards the 252 Ontario Mortgage, from the date of this Order shall be paid into the trust account of Allen Wilford of A. Wilford Professional Corporation.

[56] I am satisfied beyond a reasonable doubt that 252 Ontario intentionally failed to do what it was required to do under this paragraph. The meaning of this paragraph is clear and unequivocal. The evidence clearly shows that Mr. De Pessoa received payments from the Mortgagors after November 30, 2021, and these payments were not paid into Mr. Wilford’s trust account. Mr. De Pessoa’s evidence is that an equivalent amount of money was deposited into Mr. Wilford’s trust account on August 10, 2023, but this was more than a year after the payments were received. I do not accept Mr. De Pessoa’s affidavit evidence attempting to blame Mr. Wilford’s real estate clerk. This evidence is unsupported and, in any event, Mr. De Pessoa’s e-mail dated January 12, 2022 shows that Mr. De Pessoa understood what 252 Ontario’s obligations were under the Deposit Order with respect to payments received after the date of the Deposit Order.[^4] Further, this evidence is not credible in light of the fact that, after the alleged error of the real estate clerk in February 2022, the Plaintiffs’ lawyer made numerous requests for confirmation that any payments made towards the 252 Ontario Mortgage after November 30, 2021 had been paid into Mr. Wilford’s trust account. As stated above, these requests remained without response.

C. CONCLUSION

[57] I find that 252 Ontario is in contempt of court.

[58] My assistant will communicate with counsel to schedule the sentencing hearing. The sentencing hearing will take place in person at 330 University Avenue in Toronto. Mr. De Pessoa is ordered to be present in person at the hearing. If Mr. De Pessoa, for the second time, fails to attend the hearing in person in the absence of cogent medical evidence, I will consider this factor when determining the appropriate sentence in this case.

[59] I wish to give 252 Ontario an opportunity to purge its contempt before the sentencing hearing by providing a proper accounting with respect to the 252 Ontario Mortgage from April 3, 2018 until today. The accounting must include all backup, supporting documents and records, including, but not limited to, copies of any and all available cheques, bank drafts, wire details, e-transfers, bank account details, bank statements, ledgers, correspondence (including e-mails) and/or documents of any kind in relation to any payment (either from or to 252 Ontario) pursuant to the 252 Ontario Mortgage. The accounting shall include exact amounts, specific dates, as well as detailed, full and complete information about any interest charged under the 252 Ontario Mortgage and how the monies that were received were allocated between principal and interest.[^5] The accounting and its supporting documentation shall be attached to an affidavit of Mr. De Pessoa confirming the truth and accuracy of the accounting. The accounting must be provided by October 26, 2023.

[60] The parties shall comply with the following timetable:

a. 252 Ontario shall deliver any supplementary affidavit(s) by October 26, 2023;

b. JCCKS shall deliver any supplementary affidavit(s) by November 10, 2023;

c. cross-examinations, if any, are to be completed by November 21, 2023;

d. supplementary factums, if any, are to be delivered by December 1, 2023;

e. at least 24 hours before the hearing, JCCKS is to serve a costs outline and upload it onto CaseLines. Counsel are to be prepared to make costs submissions at the sentencing hearing.

Vermette J.

Date: September 25, 2023

[^1]: The Statement of Claim erroneously states that the charge was registered on April 4, 2018. [^2]: The fact that I conclude that a finding of contempt should not be made on this point should not be interpreted as approving in any way the conduct of 252 Ontario, Mr. De Pessoa and their counsel. The following should have been done to deal with any error in the amount included in the Deposit Order: advise JCCKS about it, provide JCCKS with supporting documentation, seek JCCKS’ agreement to pay a lesser amount and, if agreement was not obtained, seek an order of the court confirming the amount that needed to be paid into Mr. Wilford’s trust account. None of this was done. The conduct of 252 Ontario and Mr. De Pessoa – marked by indifference, passiveness and a complete failure to respond to communications and clarify anything – was reprehensible in the face of a court order. Further, the conduct of their counsel was contrary to the basic principle of civility and professionalism that a lawyer “should respond promptly to correspondence and communications, including electronic communications, from opposing counsel”: see The Advocates’ Society, Principles of Civility and Professionalism for Advocates, February 20, 2020, p. 5, principle 36. [^3]: The e-mails sent by Ms. Baker are unclear on this point. [^4]: I also note that Mr. De Pessoa’s statement that he had received the entire $12,000 by February 2022 is inconsistent with other evidence, including an e-mail sent by the Mortgagors’ lawyer to Mr. Walman on July 28, 2022. [^5]: I note that the evidence before me on the issue of whether interest was charged under the 252 Ontario Mortgage is wildly inconsistent. Among other things, while Mr. De Pessoa states in his affidavit that the Mortgagors were not being charged interest as they were making $4,000.00 principal payments, representations were made to this Court in the action commenced by 252 Ontario against the Mortgagors that interest was owing under the 252 Ontario Mortgage.