2186080 Ontario Inc. v. 1009558 Ontario Limited
CITATION: 2186080 Ontario Inc. v. 1009558 Ontario Limited 2012 ONSC 2593
COURT FILE NO.: 571/11
DATE: 20120430
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
BETWEEN:
2186080 Ontario Inc. and Michelle’s Beach House Inc.
Plaintiffs
- and -
1009558 Ontario Limited
Defendant
Gregory W. Roberts, for the Plaintiffs
Joseph C. Vieni and Jayson Thomas, for the Defendant
HEARD: April 24, 2012 at Toronto
PERELL J.
REASONS FOR DECISION
[1] The Defendant Landlord, 1009558 Ontario Limited, brings a motion for leave to appeal from the order of Justice K.L. Campbell dated November 30, 2011.
[2] Justice Campbell made his order in the context of what originally had been an application for relief from forfeiture brought by the Plaintiffs, 2186080 Ontario Inc. and Michelle’s Beach House Inc., whom I will refer to as “the Tenants”.
[3] In September 2009, by order of Justice Code, the application was converted into an action. Justice Code set a timetable that required, among other things, Affidavits of Documents to be exchanged within 30 days of the service of the Statement of Defence, with discoveries to follow within 60 days of the exchange of affidavits.
[4] In September 2009, the Tenants delivered a Statement of Claim. In their pleading, they allege that the Landlord wrongfully terminated a lease of a restaurant property in the Beach area of Toronto, Ontario.
[5] In November 2009, the Landlord delivered a Statement of Defence and Counterclaim.
[6] In December 2009, the Landlord delivered its Affidavit of Documents, but the Tenants failed to deliver an affidavit as required by the order of Justice Code.
[7] In January 2010, the Tenants delivered their Reply and Defence to the Counterclaim, and on March 10, 2010, the Tenants did deliver an Affidavit of Documents. The Landlord objected, saying that the affidavit was incomplete.
[8] Although no discoveries had yet occurred, in December 2010, the Tenants served a Trial Record.
[9] In January 2011, the Landlord delivered a notice of motion seeking a stay of the Tenants’ action, and on February 5, 2011, Justice Lederman adjourned the stay motion but set a timetable and scheduled the stay motion to be heard on April 5, 2011. Justice Lederman also ordered, among other things, that the Tenants deliver their expert reports by March 18, 2011 and that, subject to compliance with any order made on April 5, 2011, the discovery of the Tenants was to be completed by April 30, 2011. The trial record was to stand.
[10] While the stay motion was pending, in March 2011, the Landlord delivered a Demand for Particulars for the purposes of preparing for examinations for discovery. The Landlord demanded particulars of the damages claimed, the loss of income and expenses claimed, the unjust enrichment claimed, the alleged corresponding deprivation, the assets referred to in paragraph 42 of the Statement of Claim, and particulars of the Tenants’ attempts to mitigate.
[11] In its pending stay motion, the Landlord also requested a reply to the Demand for Particulars, a further and better Affidavit of Documents, and an order requiring the Tenants to provide security for costs. The Landlord’s position was that the Affidavit of Documents was deficient because it contained no documentation of the Tenants’ damage claims or of their attempts to mitigate and the financial or tax records were not included in the affidavit.
[12] In support of the motion for security for costs, the Landlord relied on the fact that there were numerous executions in respect of unpaid judgments totalling $345,934.94 registered against the Tenants and their principal, Michelle Gebhart. Because of the financial situation of the Tenants, the Landlord withdrew its counterclaim as pointless, but the Landlord did seek security for costs for defending the action.
[13] The stay motion and requests for other relief did not proceed in April 2011. Ms. Gebhart filed an affidavit in opposition to the stay motion, and she deposed about the Tenants and her own impecuniosity. She was cross-examined in August 2011.
[14] The stay motion and requests for other relief eventually came on before Justice Campbell on November 30, 2011. He made the following endorsement:
The Defendant moves for security for costs under Rule 56.01, for an order of particulars under Rule 25.01 and a further and better Affidavit of Documents under Rule 30.02 (4) from the Plaintiff.
The Plaintiff does not have the funds or assets to satisfy an order for costs in the event the action is unsuccessful against the Defendant.
The Plaintiff admits this assertion by the Defendant. Accordingly, the Defendant has shown a prima facie case for a security for costs order. The onus is therefore upon the Plaintiff to establish impecuniousity. This is a significant burden, especially for a corporate Plaintiff. …. I am satisfied, however, that the Plaintiff has met this burden. The evidence proves, more particularly, that the corporate Plaintiff has no assets (but has several significant unpaid judgments against it) and Ms. Gelbhart (the only director, officer and shareholder of the corporate Plaintiff) has no assets but for an elderly vehicle of minimal value, has no bank account as it was seized, and is unemployed but for occasional part-time work in the landscaping business for which she is paid minimum wage. These earnings do not cover her food and rent. The Judgments registered against the Corporate Plaintiff have also been registered against Mr. Gelbhart in her personal capacity. In short, the Plaintiff has demonstrated a profound inability to provide security for costs. The Plaintiff blames these financial woes upon the actions of the Defendant. The Plaintiff (and Ms. Gebhart) are unable to borrow money, and cannot even currently pays its own lawyer, let alone provide security for costs. I have no doubt that ordering the Plaintiff to pay over $50,000 as security for costs as the Defendant requests, even on an instalment plan, would put an immediate end to this litigation. This would be an injustice, as in my view, the Plaintiffs’ case has sufficient merit that it should be allowed to continue. See John Wink Ltd. v. Sisco Inc. (1987), 1987 4299 (ON SC), 57 O.R. (2de) 705 (H.C.J.) at paras. 5-14. Accordingly, this principal aspect of the Defendant’s motion is dismissed.
I also decline to order production of the particulars that have been requested by the Plaintiff. …. the fact is that the Defendant has already filed the Statement of Defence and has already conducted a broad cross-examination of Ms. Gebhart, and will be in receipt of the expert’s report dealing with many aspects of the Plaintiffs alleged damage claim well before discoveries. Therefore, I am not prepared to order the particulars requested by the Defendant.
Similarly, I see no point in requiring the Plaintiff to provide a further and better Affidavit of Documents. Whether or not the original Affidavit of Document by the Plaintiff was deficient (a topic upon which I pass no opinion), the Defendant is now in possession of all documents that would appear to be in any way relevant. This was accomplished through the Defendants cross-examination of Ms. Gebhart and counsel subsequently fulfilling undertakings. Another Affidavit of Documents at this point, in my view, seems pointless.
Accordingly, the Defendant’s motion is dismissed in its entirety.
…. With respect to the costs of this motion, while the Plaintiff has been entirely successful, this success with respect to the request for particulars and a further and better Affidavit of Documents was, at least in part, a result of the litigation of the motion itself. Given that fact due consideration, and after reviewing the costs outlines of both of the parties, I fix the costs payable to the Plaintiff, on a partial indemnity basis, at $19,013.01 (HST and disbursements included), to be paid by the Defendant within 30 days.
[15] The Landlord brings this motion for leave to appeal from Justice Campbell’s order. The test for leave to appeal from the interlocutory orders of a motions judge is set out in rule 62.02(4) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, which reads:
62.02(4) Leave to appeal shall not be granted unless,
(a) there is a conflicting decision by another judge or court in Ontario or elsewhere on the matter involved in the proposed appeal and it is, in the opinion of the judge hearing the motion, desirable that leave to appeal be granted; or
(b) there appears to the judge hearing the motion good reason to doubt the correctness of the order in question and the proposed appeal involves matters of such importance that, in his or her opinion, leave to appeal should be granted.
[16] In order for leave to be granted under rule 62.02 (4)(a), the moving party must show both: (a) a conflicting decision; and also (b) the desirability of leave to appeal being granted. If leave to appeal is to be granted on the grounds of conflicting decisions, the court must be satisfied not only that there is a conflicting decision but also that it is desirable that leave to appeal should be granted having regard to such factors as what is at stake in the order being challenged, the likelihood of the appeal being successful, the sufficiency of the record for the purposes of deciding the issues on the appeal, and the problems of expense and delay: Minnema v. Archer Daniels Midland Co., [2000] O.J. No. 1685 at paras. 34-42 (S.C.J.).
[17] In order for leave to be granted under rule 62.02 (4)(b), the moving party must show both: (a) good reason to doubt the correctness of the order; and also (b) a matter of general importance. In order to show that that there is good reason to doubt the correctness of the order, the moving party need not show that the order is wrong or probably wrong but, rather, that the soundness of the order is open to very serious debate: Ash v. Corp. of Lloyd’s (1992), 1992 7652 (ON SC), 8 O.R. (3d) 282 at pp. 284-5 (Gen. Div.); Oberlander v. Canada (Attorney General), [2004] O.J. No. 1574 at paras. 8-9 (S.C.J.); Brownhall v. Canada (Minister of National Defence) (2006), 2006 7505 (ON SC), 80 O.R. (3d) 91 at para. 30 (S.C.J.); Walker v. Woodstock District Chamber of Commerce, [2000] O.J. No. 1994 (Ont. S.C.J.).
[18] In order to show that a matter is of general importance, the moving party must show that the matter is of importance to the public or to the development of the law or to the administration of justice and that the importance of the order transcends the importance of the matter to the particular parties: Greslik v. Ontario Legal Aid Plan (1988), 1988 4842 (ON SCDC), 65 O.R. (2d) 110 at p. 112 (Div. Ct.); Rankin v. McLeod, Young, Weir Ltd. (1986), 1986 2749 (ON SC), 57 O.R. (2d) 569 at p. 575 (H.C.J.); Brownhall v. Canada (Minister of National Defence) (2006), 2006 7505 (ON SC), 80 O.R. (3d) 91 at para. 29 (S.C.J.).
[19] In the case at bar, the moving party submits that Justice Campbell made errors in: (1) not ordering a further and better Affidavit of Documents; (2) not ordering particulars for the purposes of preparing for the examination for discovery; (3) not ordering security for costs; and (4) in making his costs award.
[20] In my opinion, there is no good reason to doubt the correctness of Justice Campbell’s decision about any of these matters and none of these matters are of general importance.
[21] The essential submission of the Landlord about all of the grounds of appeal is that Justice Campbell departed from the requirements of the Rules of Civil Procedure. The Landlord emphasizes as errors: (a) the circumstance that Justice Campbell declined to order particulars for discovery after the Landlord had already cross-examined Ms. Gebhart and while anticipating receipt of an expert’s report, which the Landlord submits would not justify a departure from the requirements of the Rules; and (b) Justice Campbell’s comment that he thought it was pointless to require a further and better Affidavit of Documents in all the circumstances. The Landlord submits that it was patently obvious that details of a million dollar damage claim were necessary to conduct the discoveries and that it was patently obvious that the Affidavit of Documents was deficient and thus, it was absolutely necessary for Justice Campbell to evaluate the adequacy of the affidavit.
[22] I disagree with these submissions. I see no errors, and I, rather, see that Justice Campbell justly and fairly applied the Rules in accordance with rules 1.04 (1), 1.04 (1.1), and 2.03, which state:
General Principle
1.04 (1) These rules shall be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits.
Proportionality
(1.1) In applying these rules, the court shall make orders and give directions that are proportionate to the importance and complexity of the issues, and to the amount involved, in the proceeding.
COURT MAY DISPENSE WITH COMPLIANCE
2.03 The court may, only where and as necessary in the interest of justice, dispense with compliance with any rule at any time.
[23] In the circumstances of this case, there was no error and no matter of general importance in refusing to order a further and better Affidavit of Documents.
[24] I pause here to note that during argument, the Tenant indicated that although it was opposing the motion for leave to appeal, it would undertake to deliver an Affidavit of Documents in any event. For present purposes, I am ignoring the undertaking, because like Justice Campbell, I regard a formal Affidavit of Documents as superfluous in the circumstances of this case.
[25] Similarly, there is no basis to grant leave to appeal from the order refusing to order particulars for the purpose of preparing for the examination for discovery. Particulars are ordered primarily to clarify a pleading sufficiently to enable the adverse party to frame his or her answer, and their secondary purpose is to prevent surprise at trial: Steiner v. Lindzon (1976), 1976 760 (ON SC), 14 O.R. 122 (H.C.J.). Particulars define the issues, enable preparation for trial, prevent surprise at trial and facilitate the hearing: Physicians’ Services Inc. v. Cass, 1971 359 (ON CA), [1971] 2 O.R. 626 at 627 (C.A.).
[26] Typically, particulars are ordered to enable the opposing party to plead, which situation is not a factor in the case at bar, but particulars may also be ordered for the purposes of preparing for trial. And, in a very complex case, particulars may be ordered for the examinations for discovery: Six Nations of the Grand River Band v. Canada (Attorney General) (2000), 2000 26988 (ON SCDC), 48 O.R. (3d) 377 (Div. Ct.).
[27] The practice of asking for particulars for the purposes of trial has largely been displaced by the request to admit procedure of Rule 51, under which a party may at any time request any other party to admit, for the purposes of the proceeding only, the truth of a fact or the authenticity of a document. And the case at bar is not one of those rare cases where it would be appropriate to order particulars for the purpose of preparing for the examinations for discovery, especially when the Tenant will be delivering an expert’s report before the discovery.
[28] Turning to the matter of security for costs, Justice Campbell appreciated that a party may rely on his or her impecuniosity as a ground to resist a motion for security for costs, particularly when the other party caused the impecuniosity.
[29] Allowing impecuniosity as a defence to a motion for security for costs is grounded on fundamental fairness and on having regard to the public policy that access to justice should be available for both the rich and the poor: Smallwood v. Sparling (1983), 1983 1930 (ON SC), 42 O.R. (2d) 53 (H.C.J.); John Wink Ltd. v. Sico Inc. (1987), 1987 4299 (ON SC), 57 O.R. (2d) 705 (H.C.J.), leave to appeal granted [1987] O.J. No. 2318 (H.C.J.).
[30] A litigant who relies on impecuniosity bears the onus of proof on this point and must do more than adduce some evidence of impecuniosity and must satisfy the court that he or she is genuinely impecunious with full and frank disclosure of his or her financial circumstances: Printing Circles Inc. v. Compass Group Canada Ltd., (2007), 2007 57095 (ON SC), 88 O.R. (3d) 685 (S.C.J.); Hallum v. Canadian Memorial Chiropractic College (1989), 1989 4354 (ON SC), 70 O.R. (2d) 119 (H.C.J.); Zeitoun v. Economical Insurance Group (2008), 2008 20996 (ON SCDC), 91 O.R. (3d) 131 (Div. Ct.), affd (2009), 2009 ONCA 415, 96 O.R. (3d) 639 (C.A.).
[31] Justice Campbell applied these principles, and there is no good reason to doubt the correctness of the order dismissing the request for security for costs.
[32] Finally, turning to Justice Campbell’s costs order, no error in principle has been identified with respect to the exercise of the court’s discretion with respect to costs. The Landlord submits that the quantum is egregiously high. I agree that it is high, but in my opinion, the quantum is within the reasonable expectations of the losing party that brings a motion with the underlying tactical goal of having the Tenants’ action dismissed because of an inability to comply with an order seeking security for costs. If one lives by the sword, one risks getting cut.
[33] Accordingly, I dismiss the motion for leave to appeal with costs payable forthwith on a partial indemnity basis fixed at $5,000 all inclusive.
Perell, J.
Released: 20120430
CITATION: 2186080 Ontario Inc. v. 1009558 Ontario Limited 2012 ONSC 2593
COURT FILE NO.: 571/11
DATE: 20120430
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
BETWEEN:
2186080 Ontario Inc. and Michelle’s Beach House Inc.
Plaintiffs
- and -
1009558 Ontario Limited
Defendant
REASONS FOR DECISION
Perell, J.
Released: April 30, 2012