No Defence Without Disclosure: Ontario Court of Appeal Upholds Striking of Pleadings in Debono V. JCD Property Ltd.
In Debono v. JCD Property Ltd.[1], the Ontario Court of Appeal upheld an order striking a statement of defence after repeated failures to comply with disclosure and document preservation orders in estate litigation. The decision reinforces that parties who frustrate production obligations, particularly in fiduciary disputes involving accounting issues, risk severe procedural consequences.
Background
The dispute arose following the death of Carmen Debono (the “deceased”) in March 2022.[2] Prior to her death, two of her children, David Debono and Elizabeth Muscat (the “Appellants”), had worked for decades in the deceased’s residential leasing business.[3] Their brothers, Joseph and George Debono (the “Respondents”), commenced proceedings in 2019 challenging the Appellants’ conduct as substitute decision-makers for the deceased.[4] Those proceedings involved allegations concerning loans, financial transactions, and the management of Carmen’s affairs for the Appellants’ personal benefit.[5]
During the substitute-decision making proceedings, the Respondents obtained several orders requiring production of financial records and informal accounting information.[6]
After the deceased’s death, the Respondents became estate trustees and assumed control of the estate corporations.[7] They fired the appellants soon thereafter.[8] They also required business records and financial information from the Appellants to administer the estate and continue operating the business.[9]
The litigation later expanded into two related proceedings:
- an employment action brought by the Appellants following the termination of their employment[10]; and
- an estate action commenced by the Respondents alleging conversion of money and assets belonging to the business[11].
In January 2025, the motion judge ordered the Appellants to produce access credentials and passwords for all email accounts used for the business and prohibited them from deleting or altering emails from those accounts.[12] The order was made after the motion judge rejected the Appellants’ evidence that they did not possess relevant business records.
The Respondents later alleged that the Appellants breached that order by deleting emails and withholding access to accounts containing business communications.[13] They brought a motion seeking, among other relief, an order striking the Appellants’ pleadings.
In that motion, the motion judge struck the Appellants’ statement of defence in the estate action as a sanction for breaching disclosure and preservation orders.[14] The Court of Appeal was tasked with determining whether this was an error.
Analysis
The Court Rejected the Appellants’ Challenges to the Motion Judge’s Findings
The Appellants argued that the motion judge made several factual errors, including improperly referring to the deceased as “incapacitated” despite no formal finding of incapacity before her death.[15] The Court rejected that argument, holding that the key issue was not whether the deceased had formally been declared incapable, but that there was prima facie evidence of undue influence and insufficient accounting while the Appellants managed her affairs.[16]
The Court also rejected the Appellants’ argument that the motion judge misunderstood the evidence regarding their handling of business emails and records.[17] The motion judge was entitled to find that their explanations had “evolved” over time and conflicted with both prior sworn evidence and the contents of their email accounts.[18] The Court accepted that the Appellants’ selective production of records could not be trusted.
The Appellants Owed Duties of Full and Transparent Disclosure
The Court further held that the motion judge properly relied on earlier unappealed findings and was entitled to consider the Appellants’ prior failures to comply with production orders in the capacity proceedings.[19]
Importantly, the Court emphasized that the Appellants, as fiduciaries involved in operating Carmen’s business and affairs before her death, owed duties of full and transparent disclosure to the estate trustees.[20]
The Procedural Fairness Arguments Failed
The Court also rejected the Appellants’ procedural fairness arguments concerning the admission of reply evidence, including a signed expert report.
The Court agreed with the motion judge that this was not a Charter issue, as the proceeding concerned the striking of pleadings rather than contempt.[21] It further held that the reply evidence was properly responsive to the Appellants’ responding materials.[22]
The Court also rejected the argument that it was unfair for the Respondents to later file a sworn version of an earlier unsworn expert report.[23] As the motion judge observed, the Appellants could have objected earlier rather than “lay in the weeds” and later claim prejudice once the issue had been corrected.[24]
Striking the Defence Was Appropriate
The Court upheld the order striking the Appellants’ statement of defence and confirmed that the motion judge properly applied the framework from Falcon Lumber Limited v. 2480375 Ontario Inc[25].
The Court agreed that this was an “extreme case” involving repeated and ongoing disclosure failures despite multiple court orders and opportunities to comply.[26] It accepted the motion judge’s conclusion that it would be unfair to permit the Appellants to defend claims concerning the management of Carmen’s finances while simultaneously preventing the estate trustees from obtaining the records necessary to properly investigate those dealings.
Conclusion
The Court of Appeal dismissed the appeal and upheld the order striking the Appellants’ statement of defence. Costs of the appeal were awarded to the Respondents in the amount of $60,000 inclusive of disbursements and taxes.[27]
Final Thoughts
Debono v. JCD Property Ltd. confirms that parties who repeatedly fail to comply with disclosure obligations in estate litigation risk severe procedural consequences, including the striking of pleadings. The decision reinforces the importance of transparent accounting and production obligations, particularly where fiduciary conduct and estate assets are directly in issue.
—
[1] 2026 ONCA 310 [Debono].
[2] Ibid at para 3.
[3] Ibid.
[4] Ibid at para 4.
[5] Ibid.
[6] Ibid.
[7] Ibid at para 5.
[8] Ibid at para 6.
[9] Ibid at para 9.
[10] Ibid at para 6.
[11] Ibid at para 7.
[12] Ibid at para 10.
[13] Ibid at para 12.
[14] Ibid at para 17.
[15] Ibid at para 21.
[16] Ibid at para 22.
[17] Ibid at para 24.
[18] Ibid.
[19] Ibid at para 25.
[20] Ibid.
[21] Ibid at para 27.
[22] Ibid.
[23] Ibid at para 28.
[24] Ibid.
[25] 2020 ONCA 310.
[26] Ibid at para 30.
[27] Ibid at para 32.
Written by: Emily Caza
Posted on: May 26, 2026
Categories: Commentary, WEL Newsletter
In Debono v. JCD Property Ltd.[1], the Ontario Court of Appeal upheld an order striking a statement of defence after repeated failures to comply with disclosure and document preservation orders in estate litigation. The decision reinforces that parties who frustrate production obligations, particularly in fiduciary disputes involving accounting issues, risk severe procedural consequences.
Background
The dispute arose following the death of Carmen Debono (the “deceased”) in March 2022.[2] Prior to her death, two of her children, David Debono and Elizabeth Muscat (the “Appellants”), had worked for decades in the deceased’s residential leasing business.[3] Their brothers, Joseph and George Debono (the “Respondents”), commenced proceedings in 2019 challenging the Appellants’ conduct as substitute decision-makers for the deceased.[4] Those proceedings involved allegations concerning loans, financial transactions, and the management of Carmen’s affairs for the Appellants’ personal benefit.[5]
During the substitute-decision making proceedings, the Respondents obtained several orders requiring production of financial records and informal accounting information.[6]
After the deceased’s death, the Respondents became estate trustees and assumed control of the estate corporations.[7] They fired the appellants soon thereafter.[8] They also required business records and financial information from the Appellants to administer the estate and continue operating the business.[9]
The litigation later expanded into two related proceedings:
In January 2025, the motion judge ordered the Appellants to produce access credentials and passwords for all email accounts used for the business and prohibited them from deleting or altering emails from those accounts.[12] The order was made after the motion judge rejected the Appellants’ evidence that they did not possess relevant business records.
The Respondents later alleged that the Appellants breached that order by deleting emails and withholding access to accounts containing business communications.[13] They brought a motion seeking, among other relief, an order striking the Appellants’ pleadings.
In that motion, the motion judge struck the Appellants’ statement of defence in the estate action as a sanction for breaching disclosure and preservation orders.[14] The Court of Appeal was tasked with determining whether this was an error.
Analysis
The Court Rejected the Appellants’ Challenges to the Motion Judge’s Findings
The Appellants argued that the motion judge made several factual errors, including improperly referring to the deceased as “incapacitated” despite no formal finding of incapacity before her death.[15] The Court rejected that argument, holding that the key issue was not whether the deceased had formally been declared incapable, but that there was prima facie evidence of undue influence and insufficient accounting while the Appellants managed her affairs.[16]
The Court also rejected the Appellants’ argument that the motion judge misunderstood the evidence regarding their handling of business emails and records.[17] The motion judge was entitled to find that their explanations had “evolved” over time and conflicted with both prior sworn evidence and the contents of their email accounts.[18] The Court accepted that the Appellants’ selective production of records could not be trusted.
The Appellants Owed Duties of Full and Transparent Disclosure
The Court further held that the motion judge properly relied on earlier unappealed findings and was entitled to consider the Appellants’ prior failures to comply with production orders in the capacity proceedings.[19]
Importantly, the Court emphasized that the Appellants, as fiduciaries involved in operating Carmen’s business and affairs before her death, owed duties of full and transparent disclosure to the estate trustees.[20]
The Procedural Fairness Arguments Failed
The Court also rejected the Appellants’ procedural fairness arguments concerning the admission of reply evidence, including a signed expert report.
The Court agreed with the motion judge that this was not a Charter issue, as the proceeding concerned the striking of pleadings rather than contempt.[21] It further held that the reply evidence was properly responsive to the Appellants’ responding materials.[22]
The Court also rejected the argument that it was unfair for the Respondents to later file a sworn version of an earlier unsworn expert report.[23] As the motion judge observed, the Appellants could have objected earlier rather than “lay in the weeds” and later claim prejudice once the issue had been corrected.[24]
Striking the Defence Was Appropriate
The Court upheld the order striking the Appellants’ statement of defence and confirmed that the motion judge properly applied the framework from Falcon Lumber Limited v. 2480375 Ontario Inc[25].
The Court agreed that this was an “extreme case” involving repeated and ongoing disclosure failures despite multiple court orders and opportunities to comply.[26] It accepted the motion judge’s conclusion that it would be unfair to permit the Appellants to defend claims concerning the management of Carmen’s finances while simultaneously preventing the estate trustees from obtaining the records necessary to properly investigate those dealings.
Conclusion
The Court of Appeal dismissed the appeal and upheld the order striking the Appellants’ statement of defence. Costs of the appeal were awarded to the Respondents in the amount of $60,000 inclusive of disbursements and taxes.[27]
Final Thoughts
Debono v. JCD Property Ltd. confirms that parties who repeatedly fail to comply with disclosure obligations in estate litigation risk severe procedural consequences, including the striking of pleadings. The decision reinforces the importance of transparent accounting and production obligations, particularly where fiduciary conduct and estate assets are directly in issue.
—
[1] 2026 ONCA 310 [Debono].
[2] Ibid at para 3.
[3] Ibid.
[4] Ibid at para 4.
[5] Ibid.
[6] Ibid.
[7] Ibid at para 5.
[8] Ibid at para 6.
[9] Ibid at para 9.
[10] Ibid at para 6.
[11] Ibid at para 7.
[12] Ibid at para 10.
[13] Ibid at para 12.
[14] Ibid at para 17.
[15] Ibid at para 21.
[16] Ibid at para 22.
[17] Ibid at para 24.
[18] Ibid.
[19] Ibid at para 25.
[20] Ibid.
[21] Ibid at para 27.
[22] Ibid.
[23] Ibid at para 28.
[24] Ibid.
[25] 2020 ONCA 310.
[26] Ibid at para 30.
[27] Ibid at para 32.
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