Debono v. JCD Property Ltd., 2025 ONSC 4139

COURT FILE NO.: CV-24-00715668-00ES
DATE: 2025-07-11
SUPERIOR COURT OF JUSTICE – ONTARIO

RE: David Debono and Elizabeth Muscat, Plaintiffs
-and-
JCD Property Ltd., JCD Inc., Joseph Debono and George Debono, Defendants

CV-23-00697858-00ES
AND RE: In The Estate of Carmen Mary Debono (Deceased)
Joseph Debono, in his Capacity as Estate Trustee for the Estate of Carmen Debono, George Debono, in his Capacity as Estate Trustee for the Estate of Carmen Debono, JCD Inc. and JCD Property Ltd., Plaintiffs
- and -
David Debono, Elizabeth Muscat, Jennifer Nesci, Defendants

BEFORE: Frederick L. Myers
COUNSEL:
Spencer Toole, for David Debono, Elizabeth Muscat, and Jennifer Nesci
Ian M. Hull and Doreen Lok Yin So, for Joseph Debono and George Debono, in their capacity as the Estate Trustees for the Estate of Carmen Debono, deceased, JCD Inc., and JCD Property Ltd.

HEARD: 2025-06-27

Endorsement

The Motion

[1] The estate and estate trustees of the Estate of Carmen Debono move to hold in contempt of court or, alternatively, to strike the pleadings of David Debono, Elizabeth Muscat, and Jennifer Nesci in both the estate’s action against them and in the wrongful dismissal action brought by David Debono and Elizabeth Muscat against the estate and the estate trustees.

[2] All the parties are siblings. The deceased was their mother. She passed away in March, 2022.

[3] David Debono and Elizabeth Muscat worked for their parents’ residential real estate business for most of their adult lives. Jennifer Nesci worked for the business with David Debono and Elizabeth Muscat from 2018 to 2020. This was before their mother died but while she was already incapacitated.

[4] The estate trustees, George Debono and Joseph Debono, have careers outside the parents’ business. They allege that David Debono, Elizabeth Muscat, and Jennifer Nesci, wrongfully removed several million dollars of assets of the business shortly before their mother died. The estate also claims that David Debono, Elizabeth Muscat, and Jennifer Nesci have refused to provide access to financial documentation to allow the estate trustees to account for the estate’s assets and to locate missing funds.

[5] The relief requested in this motion stems from the alleged failure of the responding parties David Debono, Elizabeth Muscat, and Jennifer Nesci, to comply with the order of the court dated January 22, 2025. The order required:

a. Elizabeth Muscat, David Debono, and Jennifer Nesci shall immediately provide the Estate Trustees with all access credentials and passwords to the email account elizabethdebonojcd@gmail.com and all other email accounts used by Elizabeth Muscat, David Debono, and/or Jennifer Nesci for the business of Carmen Debono, deceased, which includes, but is not limited to, the operations of JCD Inc. and JCD Property Ltd. (collectively, the "Email Accounts");

b. Elizabeth Muscat, David Debono, Jennifer Nesci, and anyone acting on their joint or several instructions, on their joint or several behalf, or with knowledge of this Order, are prohibited and enjoined from making any alterations to or deleting any emails from these Email Accounts, save and except emails directly "to" and "from" Mr. Freedman or Mr. Carey (or anyone from their respective offices) which emails shall be moved to a separate database where they shall be maintained for listing and privilege review, if necessary; [Emphasis added.]

[6] The relief striking pleadings is also requested in the wrongful dismissal action commenced by David Debono and Elizabeth Muscat for two reasons. First, the estate submits that given the failure of the former employees David Debono and Elizabeth Muscat to return estate property and provide transparent access to the estate’s emails as ordered, it is obvious that the estate has good cause for their dismissal.

[7] Second, the estate trustees submit that David Debono and Elizabeth Muscat have failed to amend their statement of claim to reflect the concessions and the commitment made by their former counsel at the hearing on January 22, 2025.

[8] At the January 22, 2025 hearing, the estate sought a determination that David Debono and Elizabeth Muscat were barred from taking gifts under their mother’s will due to an in terrorem clause in the will. If it applied, the clause would have caused gifts initially given to David Debono and Elizabeth Muscat to pass them over. Instead their inheritance would go to their respective children.

[9] The estate submitted that some of the claims made by David Debono and Elizabeth Muscat in their wrongful dismissal action triggered the in terrorem clause. In response, counsel for David Debono and Elizabeth Muscat conceded that they are no longer seeking ownership of shares of the corporations owned by the estate and they no longer challenge certain financial adjustments mandated by the will. The share ownership and financial adjustments were put in issue in the wrongful dismissal action as a claim for an oppression remedy.

[10] In the endorsement dated January 22, 2025, I directed:

[42] These concessions need to be reflected in amended pleadings. Mr. Carey confirmed that the prayers for relief and allegations in the body of the statement of claim concerning shares and beneficial title to corporations will be removed as will challenges to the adjustment clause in the will. Doing so will vitiate the existing oppression remedy claim. There will be nothing left of substance in the statement of claim to support a remaining oppression remedy claim unless other amendments are made.

[11] Mr. Carey no longer acts for David Debono and Elizabeth Muscat as plaintiffs in the wrongful dismissal action. In the ensuing five months since I accepted their concessions and commitment to remove the offending language from their statement of claim, they have not done so.

Outcome

[12] For the reasons that follow, I exercise the discretion not to deal with the breaches of orders as contempt of court.

[13] Rather, I strike out all pleadings of David Debono and Elizabeth Muscat in the estate’s action pursuant Rule 60.12 of the Rules of Civil Procedure, RRO 1990, Reg 194. The estate plaintiffs may proceed to note David Debono and Elizabeth Muscat in default.

[14] While Jennifer Nesci also violated the terms of the January 22, 2025 order by delaying compliance, the estate and the estate trustees do not seek to strike out her pleadings at this time. Her much more minor role is adequately dealt with by a small costs award below.

[15] As I will discuss below, despite numerous efforts to obtain transparency as to the affairs of the parties’ deceased mother, David Debono, Elizabeth Muscat, and Jennifer Nesci have repeatedly acted to frustrate the due and lawful administration of their mother’s affairs. As fiduciaries they moved substantial sums of their mother’s money and they have steadfastly refused to disclose particulars of their dealings or the whereabouts of the funds. They ignored orders of the court obtained while their mother was still alive. Now they have breached clear terms of an order in this proceeding.

[16] Striking of pleadings is appropriate and, indeed necessary in this case because, along the way, David Debono, Elizabeth Muscat, and Jennifer Nesci have disclosed that they have deleted financial documents or otherwise ensured that the estate will not be able to create a proper history of their dealings with their mother’s funds. I have already found that the estate has a prima facie case against David Debono, Elizabeth Muscat, and Jennifer Nesci to account for missing funds. It would be the height of injustice for them to defend against the estate based on their own wrongdoing impairing the estate’s ability to particularize and trace every dollar of its claims. They are required to be transparent to respond to the estate’s claims. They cannot be allowed to move funds, cherry pick documents to disclose as it suits them, and tell ever-changing stories to try to deflect one element of the claim or another. Their approach has been unfair and unjust. They have had more than ample and very specific warnings of what was required of them. If they refuse to participate fairly, openly, and in accordance with law, in my view, they should not participate at all.

[17] I am not prepared to assess the merits of the wrongful dismissal claim at this time. Whether the estate had cause for dismissal or obtained after-acquired cause, will be decided on its merits.

[18] However, the plaintiffs David Debono and Elizabeth Muscat are in default of their commitment to remove the claims from the statement of claim that the estate relied upon as triggers of the in terrorem clause in the will. The oppression remedy claim needs to be withdrawn or re-pleaded (if the plaintiffs have new facts to plead and the limitation period has not run).

[19] The wrongful dismissal action cannot proceed until the statement of claim is finalized. The scope of documentary and oral discovery will be materially different with or without an oppression remedy being claimed. Moreover, the plaintiffs cannot be allowed to resile from their commitment to the court and to the other parties.

[20] I therefore stay the wrongful dismissal action until the plaintiffs amend their statement of claim to remove the claims that they conceded they no longer advance. I do so under Rule 60.12 and under s. 106 of the Court of Justice Act, RSO 1990, c C.43. The statute allows the court to stay a proceeding at its own motion. In my view, it is the appropriate remedy here.

[21] The stay can be lifted by order of a judge to be made at a case conference convened to deal with any pleading amendments proposed by the plaintiffs in the wrongful dismissal action.

[22] If the plaintiffs fail to amend their statement of claim to fulfill their commitment to do so by January 21, 2026, the defendants in the wrongful dismissal action may move in writing to dismiss the action.

Contempt of Court is a Last Resort Remedy

[23] It is well understood that contempt of court proceeds as a criminal or quasi-criminal charge whether the issue is characterized as civil contempt or criminal contempt.

[24] A person accused of contempt of court has many of the protections available under the Charter of Rights. See: Sutherland Estate v. Murphy, 2025 ONCA 227, para 43.

[25] I am not making findings on the applicability or the limits of the application of any rights claimed by the respondents. I am not prepared in this motion to consider whether or how the disclosure obligation on the Crown recognized by the Supreme Court of Canada in R. v. Stinchcombe can apply in contempt of court proceedings among private parties. See: Vale v. USWA Local 6500, 2010 ONSC 3039, para 9. Neither am I completely accepting the stark submission that because this was a motion for contempt of court, once the respondents decided to deliver affidavit evidence, their waiver of their right to remain silent precluded the applicants from delivering further evidence. I do not think the court went that far in Tridelta Investment Counsel Inc. v. GTA Mixed-Use Developments GP Inc., 2024 ONSC 3896. There are nuances in each case.

[26] But these claims show the inaptness of a contempt of court remedy as events develop in a civil matter that is being case managed in real time. I deal here with a high-level overview of how the motion progressed. Details will be written below when I deal with the facts under Rule 60.12 of the Rules of Civil Procedure.

[27] I am not at all critical of the estate and the estate trustees for moving quickly once they found that the respondents David Debono, Elizabeth Muscat, and Jennifer Nesci had sent and received some business documents through their “personal” email accounts. Up to that point, the respondents had claimed they had no business documents at all. When the applicants found some documents in the business email account had been deleted and others had been sent to the respondents’ other accounts, they brought this motion and came back to court very quickly in March. They sought a contempt of court remedy and disclosure of passwords and credentials for “all other email accounts used by Elizabeth Muscat, David Debono, and/or Jennifer Nesci for the business of Carmen Debono, deceased” as required by the January 22, 2025 order.

[28] I released an endorsement dated March 20, 2025 clarifying, I thought, the January 22, 2025 order and setting a schedule for this motion with the input of the respondents’ counsel. I raised the respondents’ right to remain silent and Mr. Toole advised that his clients would deliver affidavit evidence and hold out-of-court cross-examinations in the normal civil motion process.

[29] David Debono, Elizabeth Muscat, and Jennifer Nesci delivered responding affidavits sworn May 7, 2025. In their affidavits, their positions evolved. Instead of having no business documents at all, they swore that they occasionally sent or received business documents in their personal email accounts. But it was rare they said. They said they used fax and regular mail for business purposes at least before their mother died in 2022. They said that the email examples discovered by the estate trustees were isolated incidents. They objected to the release of their personal email accounts that held their private emails with their lawyers, friends, family, and regarding personal business matters.

[30] Initially the estate showed only a few documents to establish that the respondents had some business documents in face of their evidence that they did not have any. One was enough. With the responses now admitting some isolated examples of rare use of personal accounts for business emails, the estate trustees then delivered reply evidence to show that the use was much more extensive than the respondents now claim.

[31] In addition, the applicants had appended as an exhibit to their initial affidavits an unsworn computer expert report detailing some of the deletions and other documents he found on reviewing the business email account. In their reply record, the applicants included a sworn second expert report that gave greater detail to the quantity of emails involved. The expert also swore to the truth of his first report.

[32] Mr. Toole submits that in responding to contempt of court, when a party is put the election to give evidence or not, he or she is entitled to be assured that all relevant information has been disclosed. Case law supports the idea that in criminal cases the Crown must not hold back exculpatory evidence in its possession before the accused is put to his or her election.

[33] Mr. Toole submitted that his clients elected to deliver affidavit evidence when they knew the initial affidavits had only a few allegedly improper documents and the first expert report was inadmissible because it was not sworn. That was the case they had to meet and met in their responding affidavits in May.

[34] David Debono, Elizabeth Muscat, and Jennifer Nesci submit that the applicants violated their right to silence by delivering further documents and expert testimony thereafter. They acknowledge that in civil and criminal matters a party is entitled to reply to new issues raised in responding evidence. But, Mr. Toole submits, the question of use of their personal email accounts by the responding parties David Debono, Elizabeth Muscat, and Jennifer Nesci was not new. It was the subject matter of the motion throughout. If the applicants had evidence of 350-plus emails, they should have disclosed it at the outset before the respondents elected to waive their right to silence and swore that they only used their emails for business rarely or occasionally.

[35] But, no one put the respondents to their election at the case conference. There was a discussion about the availability of a trial process at which the respondents could conduct cross-examinations and then decide whether to testify or to remain silent. There are numerous other possibilities. The parties could use the regular civil process or some variant or hybrid with some evidence given out-of-court and some in court as they might agree. Mr. Toole advised that his clients were prepared to utilize the regular civil process of delivering affidavits and conducting cross-examinations out-of-court before the hearing.

[36] Moreover, Mr. Toole submits that what was actually new in his clients’ evidence was their assertion that the business ran using fax and regular mail up until the parties’ mother’s death in 2022. They said they printed emails received in their personal accounts and then dealt with them as hard copies like mail. They then deleted the emails from their personal accounts.

[37] Mr. Toole submits further that with the disclosure by the respondents that the business ran principally by fax before 2022, the applicants came under a constitutional duty to disclose the extent of faxes still found in the business records of the business now held by the estate and the estate trustees. They submit that the applicants violated their rights under Stinchcombe by failing to look for and disclose exculpatory evidence of faxes being the primary mode of business communication by the business when run by them.

[38] I do not know how one can draw parallels for constitutional purposes between the regular civil process and criminal procedure. No one put the respondents to their election to call evidence or to remain silent. Rather, at a case conference, I asked the respondents whether they wanted to wait for the hearing to decide whether to cross-examine and give evidence live or otherwise. Mr. Toole advised that his clients were content with the regular civil process of exchanging affidavits and conducting cross-examinations before the hearing. In making that decision, Mr. Toole submits, in effect, he caused the Crown’s case to close and his clients could rely on what was before the court at that moment as the full and unalterable case. Otherwise, he submits, their right to silence is defeated.

[39] In no sense is what happened at the case conference the equivalent to the Crown closing its case during a criminal trial and the court putting an accused to his or her election to decide whether to testify. The respondents were not required to elect whether to testify or remain silent at the case conference. They had every right to stay silent and make an election at the hearing of the contempt proceeding once all the estate’s evidence was completed. They chose instead to adopt the regular civil motion process.

[40] There is no provision in the Rules of Civil Procedure for a responding party to strategically determine when to plead and thereby to fix the other side’s evidentiary record. Rather, schedules are made and revised and the record evolves in accordance with the justice of the case.

[41] The difficulty is that unlike most criminal cases, the facts were evolving here. Crimes are generally not charged until the alleged criminal act is complete and the investigation is conducted to the satisfaction of the police and the Crown. It may well be the case in a regular criminal charge that the police and the Crown Attorney will have completed a full investigation and be ready with disclosure of the entire universe of documents before laying a charge. There is then a trial on full disclosure.

[42] In this case, one might speculate that had David Debono, Elizabeth Muscat, and Jennifer Nesci understood that the applicants would be entitled to reply to their evidence that they only used their personal accounts “rarely,” perhaps they would not have said that in affidavits when they did. I note that there is no evidence adduced from the respondents saying this however.

[43] But the incongruence of the two procedural models just demonstrates to me the inaptness of a contempt of court proceeding being brought too early. There was nothing wrong and much right about the estate rushing into court in March to try to deal with their concern that evidence was being withheld and the respondents were not being truthful. As discussed below, my endorsement was hoped to add clarity. But it also may have provided details that were not yet in the applicants’ Notice of Motion for contempt of court.

[44] The civil process in estates cases provides transparency of financial information to the estate trustees so they can pay taxes and properly administer the estate. It is not at all unusual for the process to be iterative as the facts and positions evolve. In fact, almost all cases on the Estates List involve some form of case management with ongoing supervision and development of procedural issues with input from judges at case conferences.

[45] Contempt of court proceedings, as a last resort, do not mesh well with an iterative process with facts evolving in real time. It is only on the civil process failing, due to knowing breaches of court orders, that contempt of court charges should become a consideration. Where, as here, enforcement under the Rules has yet to be tried or completed, it is too early for a last resort. In this way, once contempt of court is being considered, the full story will be available for inclusion in a particularized Notice of Motion. Document production will involve a known universe as a result of prior efforts to obtain whatever was being sought. While perhaps nothing can change the possibility of a right of reply evidence arising from whatever new evidence is given by the accused/respondent on the motion (if anything), most of the issues raised by Mr. Toole above should simply never arise.

[46] Regardless of whether the estate can make out the test for contempt of court, this is a case where I exercise the discretion not to proceed with a contempt charge. See: Carey v. Laiken, 2015 SCC 17, para 36.

The remainder of the decision continues with detailed factual findings, legal analysis, and the court's orders, as set out in the original text above.

FL Myers J
Date: July 11, 2025