Court File and Parties

Court File No.: CV-23-00712139-0000 Date: 2024-10-25 Superior Court of Justice - Ontario

Re: Justice David Cerqueira and Nancy Cabral Viveiros And: Mary Whibley, Steven Whibley, Singa Bui, Nicholas Cartel and Cartel & Bui LLP

Before: Justice Chalmers

Counsel: T. Nguyen, for the Plaintiff Cerqueira T. Obradovic for the Plaintiff Fung N. Cartel, Self-Represented T. Boghosian, as agent for N. Cartel A. Wray for the defendant Singa Bui

Heard: In person, on October 25, 2024

Reasons for Sentence

Overview

[1] By endorsement dated August 23, 2024, I found Nicholas Cartel and Singa Bui in contempt of court. The penalty phase was scheduled for October 25, 2024. There was a period of two months from the date of the finding of contempt to the penalty phase to provide Mr. Cartel and Ms. Bui with a further opportunity to purge their contempt before the penalty phase.

[2] A case conference was scheduled for August 30, 2024 to establish a timetable for the penalty phase. Mr. Cartel requested time to put together materials to purge the contempt. He proposed a timetable pursuant to which he would file a responding record by September 20, 2024. I ordered the defendants to deliver their responding record by September 20, 2024. No responding record was delivered by Ms. Bui or Mr. Cartel by that date.

[3] Ms. Bui surrendered her passport on October 18, 2024. She has not provided any material in answer to the production orders. In the early morning hours of October 25, 2024, Mr. Cartel sent over 395 pages of material to plaintiffs’ counsel. According to Mr. Nguyen the material was not organized, and he characterized it as a “document dump”. He also advised the court that it may not include any new information. He simply has not had a sufficient opportunity to review the material.

[4] I am not prepared to consider the material sent to plaintiffs’ counsel a few hours before the penalty phase hearing. I made it very clear to the defendants that they were to deliver their responding materials by September 20, 2024. I advised Mr. Cartel that any failure to deliver the record by that date would have significant consequences. I am of the view that this approach by Mr. Cartel is further evidence of his contemptuous behaviour. Instead of complying with orders of the court with respect to the timing and delivery of materials, he has chosen to play by his own rules and to produce the material whenever he wants. This is the way Mr. Cartel has generally conducted himself in this litigation and it is not acceptable to the court.

[5] At the commencement of the penalty phase hearing, Mr. Wray advised the court that he was recently retained on behalf of Ms. Bui. He advised that his retainer is being paid by her mother. He produced a letter from Dr. Robinson dated October 22, 2024. I do not admit the report into evidence. The letter is not in the form of a medical-legal report. There is no Form 53 submitted. The report is not attached to an affidavit. I note that the report is dated October 22, 2024. There appears to be no reason why in the three days between the date of the report and the penalty phase hearing that steps could not have been taken to have the report properly before the court in evidence.

[6] I am also of the view that the late delivery of this letter is further evidence of contemptuous conduct. For several months, Mr. Cartel has advised the court that he has “1,000s of pages of hospital records”. However, no hospital records have been provided to the court. I have stated to Mr. Cartel that if he intends to take the position that Ms. Bui has a mental condition that prevents her from participating in the action, he should produce the clinical notes of treating doctors. No clinical notes were provided. I have invited the defendants to bring another motion to determine capacity. No capacity motion was brought.

Factual Background

[7] There is no evidence before the court that the defendants took steps to purge their contempt in the two months since the liability phase of the contempt hearing. The only development is that Ms. Bui surrendered her passport on October 18, 2024.

[8] On May 21, 2024, I made an order to compel the defendants to produce their passports. Mr. Cartel surrendered his passport. Ms. Bui failed to participate in any of the case conference hearings and failed to produce her passport. By order dated June 4, 2024, I directed Mr. Cartel to use his best efforts to locate Ms. Bui’s passport and to surrender the passport. On June 17, 2024, I directed Mr. Cartel to enter the office premises that had been occupied by Ms. Bui and make further efforts to obtain her passport.

[9] Mr. Cartel advised the court that he could not locate Ms. Bui’s passport. He has repeatedly advised the court that Ms. Bui has mental health issues and that he cannot ask Ms. Bui about her passport because she is anaesthetized three-times a week for electro-shock therapy, and she has memory deficits.

[10] On August 30, 2024, I made a further order with respect to Ms. Bui’s passport. My endorsement provides as follows:

Mr. Cartel has made submissions to this court that he could not ask Ms. Bui about where her passport may be because she is an involuntary inpatient at Sunnybrook Hospital. The Fung plaintiffs conducted surveillance on July 26, 2024. This was the only day of surveillance conducted by the Fung plaintiffs. On that day, Ms. Bui was seen walking with Mr. Cartel and their four children. She did not seem to require any assistance. Mr. Cartel states that she was an outpatient at the hospital at the time of the surveillance. On further questioning he stated that she has been out of the hospital for the past month. Mr. Cartel states that he asked Ms. Bui about her passport but that her memory is damaged by electroshock therapy. There is no evidence from Ms. Bui about her efforts to comply with the order to produce the passport. There is no medical documentation before the court that supports Mr. Cartel’s submissions that Ms. Bui does not remember where her passport may be because of the treatment she has received.

[11] On September 19, 2024 I issued a warrant for Ms. Bui’s arrest to compel her to attend at the penalty phase of the contempt hearing on October 25, 2024.

[12] Another case conference was scheduled for October 4, 2024. Once again Ms. Bui was not in attendance. I ordered that she is not to leave the jurisdiction, and that if she leaves the jurisdiction Mr. Cartel was to immediately advise the court. I scheduled a further case conference for October 18, 2024. I required Ms. Bui to attend in person to produce her passport. I issued a warrant to compel her attendance at the case conference. Ms. Bui attended the case conference on October 18, 2024, by videoconference with her lawyer.

[13] On the case conference, George Tsmikilis, who was Ms. Bui’s counsel at the time, advised the court that he is in possession of Ms. Bui’s passport and could surrender it later that day. I ordered counsel to provide the passport to counsel for the Fung plaintiffs before the end of business on October 18, 2024.

[14] After making that order, Mr. Tsmikilis wrote to the court and proposed that he maintain the passport in his office, or alternatively that he surrender the passport in a sealed envelope. I notified all counsel that the order was clear and that the unsealed passport was to be delivered to counsel for Fung before the end of business on October 18, 2024. The passport was surrendered on October 18, 2024 at 3:21 p.m.

[15] Counsel for Fung filed an affidavit which attached Ms. Bui’s passport as an exhibit. The passport has the following stamps;

Zurich, Switzerland – October 19, 2023

Milan, Italy – October 22, 2023

Reykjavik, Iceland – November 9, 12, 2023;

Sao Migueal Island, Portugal - September 25, October 1, 2024

[16] The passports stamps for Milan and Zurich in October 2023 are concerning. The frauds were related to real estate closings in which Ms. Bui acted for the vendor or purchaser. Funds were paid in her trust account, but the funds were not used for their intended purpose. Instead, the funds were paid out of the account. Presumably this was done by Ms. Bui and/or Mr. Cartel. The defendants have not advised the court where the funds were disbursed.

[17] Most of the real estate closings in which the frauds took place occurred between September 29 to October 30, 2023. For example, the Cerqueira transaction was scheduled to close on September 29, 2023. Ms. Bui’s passport provides that she traveled to Milan and Zurich in the month when the majority of the frauds took place. Ms. Bui has not provided any explanation for why she traveled to Europe in October 2023. She has failed to provide an accounting of the misappropriated funds.

[18] The timing of the trip to Portugal in September – October 2024 is also concerning. At the time of her trip, I had been advised by Mr. Cartel that he did not know the location of Ms. Bui’s passport. He stated that she could not recall where her passport was because her memory had been damaged by electro-shock therapy. However, we now know that Ms. Bui had her passport and was able to travel in Portugal in September – October 2024. I find it surprising that she was able to travel to Portugal in September-October 2024, but was unable to attend the case conference on October 4, 2024.

[19] On October 4, 2024, I made an order that Ms. Bui was not to leave the jurisdiction, and if she left, Mr. Cartel was to immediately advise the court. Although Mr. Cartel was present on October 4, 2024, he did not advise the court that Ms. Bui had left the jurisdiction and traveled to Europe a few days before.

[20] Instead of using the period between the finding of contempt and the penalty phase to purge the contempt, Mr. Cartel and Ms. Bui used the period to continue their contemptuous conduct.

Discussion

General Principles

[21] The enforcement of court orders is fundamental to the rule of law. As noted in Thrive Capital Management Ltd. v. Noble 1324 Queen Inc., 2022 ONSC 4081, (Thrive Capital):

[46] Contempt undermines the authority of the court. Serious sanctions are warranted for contempt because contempt is an attack on our fundamental social order. We organize our society based on the rule of law. At its most basic level, that means that we do not allow individuals to resort to violence or coercion to enforce their rights but depend on the courts to enforce rights. That only works if people obey court orders. People who flout court orders put our entire system of social order at risk. […]

[22] At the penalty phase of a contempt hearing, courts have a wide discretion to impose a penalty: Rule 60.11(5). The factors relevant to the determination of the appropriate sentence for civil contempt include:

a) The proportionality of the sentence to the wrongdoing;

b) The presence of mitigating factors;

c) The presence of aggravating factors;

d) Deterrence and denunciation;

e) The similarity of sentences in like circumstances; and

f) The reasonableness of a fine or incarceration: Mercedes-Benz Financial (DCFS Canada Corp.) v. Kovacevic, 2009 9423 (ON SC) at para. 10, see also Astley v. Verdun, 2013 ONSC 6734, at paras. 13 and 16.

Consideration of the Factors

[17] The defendants’ contempt has continued over many months. Justice Centa first made his Mareva order in January 2024. He made orders with respect to productions that continue to be outstanding. I conducted a number of case conferences in which I made further production orders. The defendants have not provided a comprehensive chart with respect to their living expenses and how those expenses are being paid. The defendants have failed to provide an accounting of the misappropriated funds. Ms. Bui failed to attend any of the case conferences or motions with the exception of the case conference on October 18, 2024, at which time she agreed to surrender her passport.

Mitigating Factors

[18] Mr. Cartel states that he has attempted to comply with all orders for production of financial documentation. He states in his submissions today that he has not shied away from his responsibilities. He surrendered his passport. He attended all of the case conferences. He states that he provided a significant amount of material just a day before the penalty phase hearing. Counsel for the plaintiffs has not had an opportunity to review the material to determine whether it complies with the court orders. I accept as a mitigating factor that Mr. Cartel surrendered his passport and participated in the case conferences. However, I do not accept his submissions that he has made bona fide attempts to comply with the production orders. There continues to be a significant amount of material outstanding. If Mr. Cartel wished to properly put all of the relevant productions before the court, one would expect that he would have filed a record by September 20, 2024.

[19] Ms. Bui surrendered her passport on October 18, 2024. It purged the contempt for one of the orders made against her. Although the surrender of the passport may be a mitigating factor, it is not one for which she should receive much credit. Ms. Bui failed to surrender her passport for many months after the order was first made. The information revealed in the passport indicates why she may have been so reluctant to voluntarily produce the passport. It shows that she traveled to Zurich and Milan in the month with the most fraudulent activity. The passport also shows that she traveled to Portugal after I had issued a warrant for her arrest. She was apparently able to travel to Portugal but unable to attend the case conferences or to comply with the court orders.

[21] The defendants argue that Ms. Bui’s mental health condition is a mitigating factor on sentence. A party seeking to rely on a mitigating factor in contempt proceedings must establish that factor on a balance of probabilities: Chiang (Re), 2009 ONCA 3, paras. 50-52.

[22] As I noted in my Reasons for Decision dated August 23, 2024, there is very little evidence before the court with respect Ms. Bui’s alleged condition. Despite promising “thousands of pages of hospital records” the defendants have not produced any hospital records or clinical notes from treating doctors. No new motion to determine capacity has been brought on behalf of Ms. Bui. The defendants were invited on many occasions to provide additional medical evidence before the court. They failed to do so. The delivery of a letter from Dr. Robinson on the morning of the penalty phase hearing in a form that is not evidence is clearly “too little too late”.

[23] Recent developments also confirm that Ms. Bui has capacity. Ms. Bui’s passport indicates that she was able to travel to Portugal in late September 2024. If she was mentally ill to the extent that she could not be asked questions about what happened to the funds or to produce relevant documents, one would not have expected that she could travel abroad.

[24] I am of the view that Ms. Bui’s alleged mental health issues have not been established on a balance of probabilities. I do not consider this to be a mitigating factor.

Aggravating Factors

[25] Mr. Cartel and Ms. Bui have not shown remorse for their conduct. The defendants continue to ignore court orders and make misrepresentations to the court. Mr. Cartel represented to the court that Ms. Bui was either in the hospital or was too mentally ill to answer basic questions about the law practice. However, on July 26, 2024, surveillance showed Ms. Bui walking in her neighbourhood with Mr. Cartel and four children. The court was advised that Ms. Bui could not find her passport. However, in September 2024, she had her passport and traveled to Portugal. Mr. Cartel knew of the prohibition on her travel, and he did not advise the court of the fact that she had left the jurisdiction at the case conference on October 4, 2024. Instead of showing remorse and making all reasonable efforts to comply with orders, the defendants continue to treat the process with contempt.

[26] It is an aggravating factor that the defendants engaged in their conduct for personal gain. Millions of dollars were deposited into the Cartel + Bui trust account in the month of October 2023. Those funds were not used for their intended purposes. The funds were transferred out of the trust account. The funds must have been transferred by Ms. Bui and/or Mr. Cartel. We now know that at the time the funds were transferred out of the trust account, Ms. Bui had traveled to Milan and Zurich. She has not provided a sworn statement of her worldwide assets. The defendants have not provided an accounting as to what happened to the funds paid into her trust account.

[27] I am also of the view that the defendants’ conduct puts other assets at risk. The defendants’ have failed to disclose how they are paying for their day-to-day living expenses. This suggests that they have undisclosed assets that are being used to pay their expenses. Ms. Bui travelled to Milan and Zurich in October 2023. She returned to Europe in September-October 2024. There is a real risk that she has the ability to put assets beyond the reach of the plaintiffs.

[28] The defendants are established lawyers. They know the importance of court orders and the obligation to comply with court orders. They know that they are to attend court when ordered to do so. They repeatedly failed to comply with the orders. Mr. Cartel made misrepresentations to the court with respect to Ms. Bui’s passport and her ability to travel. He failed to advise the court on October 4, 2024 that his wife had been out of the country. I find that the deliberate conduct on the part of officers of the court to be aggravating factor in determining the appropriate penalty.

Deterrence and denunciation

[29] The objectives of a civil contempt order are to enforce court orders, and/or to punish the wrongdoer to achieve both specific and general deterrence. Where efforts to compel the contemnor to comply with the orders have been unsuccessful, the matter may have gone beyond compliance and is now at the deterrence and denunciation stage. As stated in Thrive Capital:

[55] While the court’s primary objective of compelling compliance with the Mareva and Disclosure Order, the deterrence objective cannot be ignored. The court not only must show the Developer Defendants but also must show the public at large, that eventually the chances will run out. Even if there is a tendency to show some leniency in cases of civil contempt, every case has a breaking point, and it has been reached in this case.

[30] The Ontario Court of Appeal has recently confirmed that punishment has been added as a secondary purpose of sentencing: Castillo v. Xela Enterprises Ltd., 2024 ONCA 141, at para. 89.

[31] It is my view that there has been chronic failure on the part of the defendants to comply with the court orders despite being given ample opportunity to do so. I am satisfied that the matter has gone beyond compliance and that the sentencing principles of deterrence and denunciation are paramount. Counsel for Cerquiera argues that “enough is enough”. I agree.

Similarity of Sentences in Like Cases

[32] The range of sentence can “vary greatly with the facts of the case”: Greenberg v. Nowack, [2018] O.J. No. 366, aff’d [2020] O.J. No. 2370 (ONCA), at para. 43. The sentence should be similar to sentences imposed on similar contemnors for similar contempt committed in similar circumstances: Criminal Code, s. 718.2(b).

[33] In my view, the following cases are the most relevant:

• Castillo v. Xela Enterprises Ltd., 2024 ONCA 141 – The contemnor failed to comply with a receiver’s investigation. The Court of Appeal upheld the sentence of 30 days incarceration.

• Business Development Bank of Canda v. Cavalon, Inc., 2017 ONCA 663 – The contemnor was a lawyer who had been found in contempt for a single breach of an order to produce documents for inspection. The Court of Appeal imposed a sentence of incarceration for 45 days.

• Nagle v. Pacheco, 2023 ONSC 7510 – The contemnor persistently failed to provide financial disclosure in numerous court orders. The only compliance was to surrender the passport. The court imposed a sentence of incarceration of 30 days.

• Thrive Capital Management Ltd. v. Noble 1324 Queen Inc., 2022 ONSC 4081 – The contemnor failed to comply with a Mareva injunction restraining the dissipation of assets and to provide an accounting of the misappropriated funds. The court imposed a sentence of incarceration of 30 days.

• 2363523 Ontario Inc. v. Nowack, 2016 ONCA 951 – The defendant failed to produce documents and to account for the funds he invested for the plaintiffs. He was imprisoned for 30 days.

Reasonableness of a Fine

[35] I have considered whether a fine would be an appropriate penalty. Here, Mr. Cartel and Ms. Bui are judgment debtors owing millions of dollars to the various judgment creditors. They state they have no money to pay the judgments. A fine would be an additional debt that will go unpaid. I am satisfied that a fine that would not be paid by the defendants does not serve the objectives of sentencing: Thrive Capital, at para. 64.

The Penalty

[36] A custodial sentence is a sanction of last resort. It is reserved for the most serious contempt or where there is no choice but to jail a contemnor in order to coerce compliance or express deterrence and denunciation: Thrive Capital, at para. 57. In determining whether a custodial sentence is appropriate, the court will consider the following factors: has the contempt continued over a period of many months, has the contemnor shown remorse and does the contempt threaten other assets: Sussex Group v. Sylvester, 2002 27188 (ON SC).

[37] I am satisfied that a consideration of the factors favours the imposition of a custodial sentence. The contempt has continued for many months. The Mareva order was made almost 10 months ago. Over that period of time there have been multiple case conferences where I have made further production orders. The defendants have failed to provide the information ordered to be produced. There is no detailed chart setting out the living expenses and how those expenses are being paid. There is no accounting as to what happened to the misappropriated funds. With respect to Ms. Bui, she failed to attend all of the case conferences and motions, with the exception of the case conference on October 18, 2024, when I had issued a warrant for her arrest. She has not shown remorse, and the contempt, particularly in light of her recent travel to Europe threatens other assets.

[38] I find that the appropriate sentence for both Mr. Cartel and Ms. Bui is a period of incarceration of 30 days. I find this is the minimum sentence that will serve the sentencing objectives of denunciation and deterrence.

[39] I recognize that Mr. Cartel and Ms. Bui have four small children. To have both parents in custody at the same time may impose an unnecessary hardship on the children. I order that Mr. Cartel will begin serving his sentence immediately. Ms. Bui will begin serving her sentence on November 26, 2024.

[40] It is proposed that Ms. Bui’s sentence should be served in a psychiatric facility to allow her to obtain treatment. It is also proposed that there may be a greater opportunity for her to purge the contempt if she is not in a provincial reformatory. I schedule a motion for November 18, 2024 at 11:00, at which time I will hear argument as to where her sentence should be served. If she purges her contempt by the date of the hearing, she may apply to the court at that time, for a reduction of her sentence. Ms. Bui is ordered to attend the hearing on November 18, 2024, in-person.

Disposition

[41] For the reasons set out above, I make the following order:

(a) I sentence Mr. Cartel to a period of incarceration in a provincial reformatory for 30 days. The sentence will begin immediately;

(b) I sentence Ms. Bui to a period of incarceration for 30 days. The sentence will begin November 26, 2024. Where Ms. Bui is to serve her sentence will be determined at the hearing on November 18, 2024;

(c) While incarcerated, the defendants continue to be under the obligation to produce to counsel all documentation previously ordered by the court. This obligation is not affected by the period of incarceration;

(d) If Mr. Cartel or Ms. Bui complies with all production orders before they complete their sentence, they may apply to this court for a reduction of the sentence;

(e) Section 6(1) of the Prisons and Reformatories Act, R.S.C. 1985, c P-20 as incorporated into s. 28 of the Ministry of Correctional Services Act, R.S.O. 1990, c M.22 apply. Those sections provide that there shall be no remission on the sentence unless or until ordered by the court; and

(f) I signed a warrant of committal incorporating these terms.

[42] The plaintiffs are entitled to their costs of the penalty phase hearing. If the plaintiffs are seeking their costs and if the parties are unable to agree on the amount, the issue will proceed in-writing. The plaintiffs may deliver their written cost submissions of no more than three pages in length within 15 days of the date of this endorsement. The defendants may deliver their written submissions in response on the same basis within 30 days of receiving the plaintiffs’ submissions.

Date: October 25, 2024

Chalmers J.