NEWMARKET COURT FILE NO.: CV-19-140833 DATE: 20240614 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN: KAVIRAJ NAGARAJAH, THANYARUBAN KUMARAVELU and VANNAI ANANDARA KANDASAMY Plaintiffs/Responding Parties – and – STEVE CHRISTOPHER DEFREITAS a.k.a. STEVE C. DEFREITAS a.k.a. STEVE DEFREITAS, CAROLINE GEETA DEFREITAS, AMIGO TRANSPORT LTD., SANTIAGO WILCHES, EDDY’S DEMOLITION & EXCAVATION, THAROONDARANTH MAHARAJ a.k.a., THAROONDARANTH EDDY MAHARAJ, DONNA MYSHRALL, EDDY CONSTRUCTION INC., CARMITA CAGPATA, SEGUNDO R. CAGPATA, 1022013 ONTARIO LIMITED a.k.a. SUPERIOR INDUSTRIAL SERVICES, ANTHONY PORCO a.k.a. ANTONIO PORCO, MONTERO TRUCK SERVICES LTD., CRISTOBAL MONTERO, KARL C. FRATER and JOHN DOE Defendants/Moving Parties

Counsel: Richard Hammond, for the Plaintiffs/Responding Parties Mark Vernon, for the Defendants/Moving Parties

HEARD: June 5, 2024

ENDORSEMENT

HEALEY, J.:

Nature of the Motion

[1] The moving parties, the defendants Steve and Caroline DeFreitas, seek an order staying the enforcement of the default judgment of Justice Verner dated August 4, 2021 in the amount of $4,725,394 plus $21,000 in costs pending the hearing of their motion dated February 3, 2024 to set aside the default judgment. The matter is on the triage court for June 11, 2024 to timetable the steps required for the hearing of motion. The only matter before me is the request for a stay pending the hearing of the balance of the motion.

[2] The motion was brought forward and scheduled on an urgent basis to deal with the stay request because the defendants have recently been served with notice from the Sheriff’s office that it would be proceeding with the sale of their property, which is their principal residence, to satisfy the Writ of Seizure and Sale obtained by the plaintiffs’ lawyer on September 23, 2021.

[3] At the outset, Mr. Hammond advised that his clients concede to a stay as against the defendant Caroline DeFreitas.

The Law

[4] Section 106 of the Courts of Justice Act, R.S.O. 1990, c. C. 43, as amended, provides:

A court, on its own initiative or on motion by any person, whether or not a party, may stay any proceeding in the court on such terms as are considered just.

[5] The ordinary test for a stay of a proceeding is the well-known three-part test found in RJR–MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311, at para. 43, as follows:

(a) A serious issue to be tried; (b) Irreparable harm to the moving party if the request is denied; (c) Balance of convenience between the parties ie. which of the parties would suffer greater harm from the granting or refusal of the remedy pending a decision on the merits.

[6] In Morguard Residential v Mandel, 2017 ONCA 177, at para. 17, the Court of Appeal confirmed that this is the correct test when deciding whether to grant a stay. At para. 18, the Court also directed that because a stay is a discretionary remedy, a court may also consider the “clean hands” doctrine when deciding whether to order a stay. In Morguard, a finding of bad faith made by the Landlord and Tenant Board contributed to the Court’s denial of a stay.

The Evidence

[7] The DeFreitas defendants are the owners of the property located at 20172 Hwy 48, Mount Albert, Ontario (the “Property”). Their principal residence is located on the Property and they reside there with their three children ranging in age from 13 to 23. Their evidence is that they do not own any other property and will have nowhere to live if the property is sold.

[8] This action was commenced in 2019, and arises from the allegation that the defendant Steve DeFreitas has been illegally dumping truckloads of material on his property and on the adjacent property owned by the plaintiffs.

[9] After several unsuccessful attempts at personal service of the Statement of Claim, the plaintiffs obtained an order for substituted service by regular and registered mail to the Property. The plaintiff Mr. Nagarajah has also deposed that his lawyer provided the Statement of Claim to the DeFreitas’ provincial offences lawyer in 2019. The DeFreitases say that they did not receive the Statement of Claim in the mail.

[10] The DeFreitases were noted in default on December 19, 2019 and on August 4, 2021, Justice Verner ordered Judgment against the DeFreitas defendants in the amount of $4,725,394 plus costs in the amount of $21,000.

[11] It is the DeFreitas’ evidence that the Judgment and the Statement of Claim did not come to their attention until they were attempting to refinance the Property in or around June 2023. Before that, they say they had no knowledge of the existence of this action, or attempts made by anyone to serve them with the Claim.

[12] Mr. DeFreitas was charged with various offences under the Conservation Authorities Act, R.S.O. 1990, c. C.37, by the Lake Simcoe Region Conservation Authority (“LSRCA”), due to dumping on the Property and the plaintiffs’ land. At para. 12 of their joint affidavit filed in support of this motion, the DeFreitases admit that they dumped fill on the Property, but deny that any of their actions caused damage to the plaintiffs’ property, deny trespassing on the plaintiffs’ property, and deny that any of the soil disposed of was contaminated.

[13] The denial of trespassing and dumping on the plaintiffs’ land is problematic, to say the least, given that Mr. DeFrietas pleaded guilty to six offences on January 20, 2023. One of those offences was with respect to the disposal and grading of material on the property owned by the plaintiffs, as well as on the land of another adjacent neighbour.

[14] As part of that prosecution, Mr. DeFrietas has been ordered to remediate the Property and the plaintiffs’ property, by Restoration Order dated January 20, 2023. The reason for the refinancing of the Property was to pay for the rehabilitation that has been ordered.

[15] Mr. Nagarajah’s evidence is that no substantive steps have been taken to restore the plaintiffs’ property, and that Mr. DeFrietas has continued to dump on his property even after the Restoration Order was made.

[16] To assist them in dealing with the provincial offences matter, the DeFreitas’ retained the services of a paralegal, Jeff Bogaerts. After the Judgment was discovered, Mr. Bogaerts attempted to negotiate a global resolution of both the Judgment and the Restoration Order with the plaintiffs’ counsel. Communications continued between the two with respect to the Judgment, the Writ, financing and the Restoration Order until Mr. Bogaerts retainer was terminated on September 23, 2023.

[17] Mr. Friedman, the DeFreitas’ current lawyer, was first consulted on August 25, 2023 and he was retained by Steve DeFreitas on October 27, 2023, and by Caroline DeFreitas on November 14, 2023. On November 8, 2023, Mr Friedman wrote to counsel for the plaintiffs confirming instructions to bring this motion.

[18] On November 27, 2023, Mr. Friedman’s office requested a date for the motion from the trial coordinator in Newmarket. On January 3, 2024, Mr. Friedman requested that the matter be added to the long motions list, which the plaintiffs did not oppose. It was added to the long motions list on or about January 31, 2024.

[19] The motion was served on the plaintiffs on February 8, 2024. Mr. Vernor advised the court that his earlier requests to timetable the pre-hearing steps had not been responded to by the plaintiffs’ counsel. A responding record was not served until June 4, 2024, the day before the hearing of this motion. Accordingly, cross-examinations have not taken place and the evidence before me remains untested.

Clean Hands

[20] The evidence that Mr. DeFrietas continues to carry on dumping activities on his own and the plaintiffs’ land comes through Mr. Nagarajah’s affidavit sworn June 4, 2024. The DeFreitas defendants did not have any opportunity to reply to this affidavit.

[21] Mr. Nagarajah’s evidence is that since the Restoration Order, Mr. DeFrietas has continued to trespass on to his property and dump waste. Mr. Nagarajah does not live at the adjacent property, but has renters who he claims have terminated their tenancies because of flooding issues caused by the illegal dumping. He has been to his property at least two dozen times since the Restoration Order was made and has personally seen dump trucks coming into the driveway of the Property, crossing the property line, and dumping waste. A video has been submitted as an exhibit, purporting to show this dumping in August 2023. I do not give the video much weight, as the preconditions for its admissibility are not addressed in the affidavit, such as who recorded it and whether its maker agrees that it shows what Mr. Nagarajah describes.

[22] Despite the length of time that this infraction is alleged to be continuing, no interlocutory relief has been sought by the plaintiffs to stop this dumping.

[23] Given the seriousness of the matter and the repercussions of not granting a stay, I find that it would be unfair to consider denying the stay on the basis of bare allegations, before the credibility of each party has been able to be fully evaluated by the court.

Serious Issue

[24] Mr. Hammond submitted that the motion for the stay should fail on this first prong of the RJR test, given that the defendants will be unable to meet the test to set aside the default judgment.

[25] The court must consider the following factors when determining a motion to set aside a default judgment, as set out in Mountain View Farms v. McQueen, 2014 ONCA 194, at paragraphs 48 and 49:

(a) whether the motion was brought promptly after the defendant learned of the default judgment; (b) whether there is a plausible excuse or explanation for the defendant's default in complying with the Rules; and (c) whether the facts establish that the defendant has an arguable defence on the merits. (d) the potential prejudice to the moving party should the motion be dismissed, and the potential prejudice to the respondent should the motion be allowed; and (e) the effect of any order the court might make on the overall integrity of the administration of justice.

[26] It is not my role to decide the main relief on this motion. However, at this stage it cannot be said that the defendants’ motion is doomed to fail. The defendants have presented some evidence as to why this motion was brought months after learning of the Judgment, they have provided sworn evidence that the Statement of Claim and Judgment never came to their attention until June 2023, and the plaintiffs cannot rely on the guilty plea of Steve DeFreitas to prove liability on behalf of Caroline DeFrietas. Further, there is a live issue with respect to the plaintiffs’ damages in light of the requirements set out in the Restoration Order, the cost of which must be born by Steve DeFreitas. I must not pre-determine the motion by making adverse credibility findings against one party or the other, despite Mr. Hammond’s urgings that I do so, particularly where the defendants’ evidence relating to service of the Claim is concerned.

[27] The plaintiffs filed an expert report at the time of their motion for default judgment, which was how the quantum of damages was determined. That report, the “Emms Report” opined that it would cost $4,181,764.60 plus HST to return the plaintiffs’ property back into compliance with the Ministry of Environment, Conservation and Parks guidelines/requirements. I am satisfied that, in light of the Restoration Order, the defendants have at least presented an arguable case that there is a serious issue to be tried on, at least, the question of damages.

Irreparable Harm

[28] Mr. Hammond conceded during argument and in the plaintiffs’ factum that the sale of the Property is a serious matter and harm will result to the DeFrietas defendants if the execution of the Writ proceeds. However, it is also submitted that continuing harm is sure to occur to the plaintiffs if a stay is granted, as Mr. DeFreitas is likely to continue his dumping.

[29] The DeFreitas defendants would certainly suffer irreparable harm from the sale of their property, as the family would be left without a home and all of the proceeds would be lost to them in partial satisfaction of the Judgment. Mr. DeFreitas’ evidence is that the Property was appraised in 2023 at approximately $2.3 million and is encumbered by a mortgage of approximately $400,000.

Balance of Convenience

[30] A stay would only remain in place until the hearing of the main motion. In the meantime, post-judgment interest continues to accrue and the Property is still subject to the Writ of Seizure and Sale.

[31] While the plaintiffs will be prejudiced by having justice delayed, they do not appear to have taken steps to enforce the Judgment between August 2021 and this year. Mr. Hammond explained that this was because they were waiting for a resolution to the provincial offence matter, but that ended over a year ago.

[32] I find that the balance of convenience weighs in favour of granting the stay.

[33] However, it is important that the court use its powers to ensure that the DeFrietases are not in fact flouting the law and continuing to dump on their own or the plaintiffs’ property.

[34] Accordingly, this court orders:

(1) The defendants Steve and Caroline DeFreitas are granted a stay of execution of the Judgment of Justice Verner dated August 4, 2021 and that no one shall take any steps to enforce such order until such time as their motion for default judgment is heard and any appeal disposed of or the time for appeal has expired. (2) The defendants Steve and Caroline DeFreitas shall not dump, nor cause or allow any other person to dump, any fill or other material on the plaintiffs’ land located at 20122 Highway 48, East Gwillimbury, Ontario, other than as allowed by and strictly in accordance with a permit from the LSRCA to complete the works described in the Restoration Order, as set out in paragraph 2 of the Restoration Order. (3) If the defendants breach the terms of the order at paragraph 2, the defendants may bring an urgent motion on short notice for an order lifting the stay, and if successful, the defendants shall have their costs of the motion on a full indemnity basis. (4) The balance of the defendants’ motion to set aside the default judgment is adjourned to the date that was scheduled at the Triage Court.

Costs

[35] Counsel agreed on the quantum of costs to be awarded to the successful parties on this motion. This court orders that the plaintiffs shall pay the costs of this stay motion to the DeFreitas defendants fixed in the amount of $7,500 inclusive. This sum is not payable until the main motion and related costs are determined and shall be set off against any costs payable by the defendants if the motion is denied.

Madam Justice S.E. Healey

Released: June 14, 2024