CITATION: Faraone v. 285 Spadina SPV Inc., 2023 ONSC 3357

DIVISIONAL COURT FILE NO.: 167/23 DATE: 20230602

ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT

BETWEEN:

RAYMOND FARAONE AND JULIE FARAONE

Rob Moubarak and Adam Zweig, for the Moving Parties/Respondents in Appeal

Applicants/Respondents in Appeal

– and –

285 SPADINA SPV INC., RONALD HITTI, RAJA FARAH AND EDOUARD HITTI

Self-represented, Respondent, Ronald Hitti

Respondents/Appellant in Appeal

HEARD at Toronto: June 1, 2023

LEIPER J. (Orally)

INTRODUCTION AND BACKGROUND

[1] The Applicants seek security pursuant to the Rules of Civil Procedure, relative to an appeal brought by the Respondent, Ronald Hitti, from the application decision and orders of Justice Dineen of February 15, 2023. The motion arises from an appeal from an order made in the Superior Court of Justice concerning a residential tenancy between the Applicants, who are the landlords, and Mr. Hitti, the tenant in a unit he rented in 2020 for $8,400.00 per month, which has since been increased to $8,500.10.

[2] On February 15, 2023, Justice Dineen granted the Applicants’ application to terminate the tenancy and ordered payment of $115,165.55, and costs in the amount of $13,721.21. The evidence placed before Justice Dineen was that the Respondent entered into a lease with the Applicants in December of 2020, and by April of 2021, problems with payment of rent began. The application materials described a pattern of complaints by the Respondent followed by late, partial or no rent being paid, until early 2022 when rent payments ceased altogether. This fact was not contested before Justice Dineen.

[3] The Respondent argued that prior proceedings before the Landlord and Tenant Board meant that Justice Dineen did not have jurisdiction over the application. The Applicants had initially proceeded in that forum, but due to the amount of rent arrears and the monetary jurisdiction of the Board, the Applicants had proceeded in the Superior Court of Justice as they were permitted to do pursuant to the Residential Tenancies Act 2006, S.O. 2006, c. 17 (the “RTA”). The evidence before Justice Dineen was that the Applicants had requested their application before the Board to be withdrawn.

[4] On March 17, 2023, the Respondent served and filed a Notice of Appeal from Justice Dineen’s order, pursuant to s. 210 of the RTA. The payment of arrears of rent and costs remain outstanding. The Respondent has continued to occupy the unit but has not paid rent since filing his appeal. The Applicants estimate the costs of the appeal as $15,000.

[5] The Applicants submit that the grounds for appeal are without merit.

[6] The Respondent’s Notice of Appeal asserts that the application before Justice Dineen is an abuse of process and seeks its dismissal. The Respondent also seeks an order restraining the Applicants from commencing any legal proceedings against him or the other named Respondents without advance leave of the court.

[7] The first ground of appeal cites errors made by Justice Dineen in omitting “to refer to, acknowledge or consider the RTA and jurisprudence with respect to the RTA’s applicability to proceedings commenced in Superior Court under s. 207 of the RTA.” Twenty-six further grounds of appeal raise variations on this theme, as well as issues with service, jurisdictional issues and failure to consider the Respondent’s materials.

[8] The Respondent owns no real property in Ontario. A search of his bank account shows a negative balance.

[9] The Applicants bring this motion based on a concern that the Respondent will endeavour to attempt to live rent-free in the unit, pending a frivolous appeal and without the ability to pay costs of the appeal, to their ongoing and increasing financial prejudice.

[10] They also seek today to have the Respondent’s responding materials struck on the basis that they were filed late and after he received the benefit of one extension. Further, they submit that the Respondent filed his factum late, and amended it several times up until the last minute before the hearing of this motion. The Respondent apologized for his lateness in serving and filing his material and explained that his delays are linked to his medical conditions, which he supported with medical records uploaded to CaseLines. I would not strike the responding materials as a matter of discretion. There is merit in ensuring that I have the Respondent’s position before me on the substance of the motion.

[11] The Respondent contends that he has been badly treated by his landlords from the beginning of the tenancy and by being subjected to proceedings before the Landlord and Tenant Board. He does not deny that rent remains unpaid. The Respondent has characterized this motion as an attempt to prevent him from having his appeal heard by the court. He submits he has not been heard by “anybody” in this matter. He also submits that the Applicant, Mr. Faraone, has not come to court with clean hands, having filed affidavits that misrepresent the nature of the lease between the parties. These submissions appear to attempt to distract from the nature of the question before me and I make no finding on them.

[12] Justice Dineen found that the Respondent’s late filing of material and request for an adjournment at the last minute was a “blatant delay tactic to enable him to continue to live rent-free in the property”. He found that there was no dispute over his jurisdiction to make the orders requested. Justice Dineen concluded that any claims for set-off before the Board based on alleged violations of the RTA that remain live may be dealt with there in any ongoing proceedings taken by the Respondent.

Analysis

[13] The Applicants ground their legal basis for security for costs in two rules from the Rules of Civil Procedure R.R.O. 1990, Reg. 194. Rule 61.06 (1) provides:

Security for Costs of Appeal

61.06 (1) In an appeal where it appears that,

(a) there is good reason to believe that the appeal is frivolous and vexatious and that the appellant has insufficient assets in Ontario to pay the costs of the appeal;

(b) an order for security for costs could be made against the appellant under rule 56.01; or

(c) for other good reason, security for costs should be ordered,

a judge of the appellate court, on motion by the respondent, may make such order for security for costs of the proceeding and of the appeal as is just. R.R.O. 1990, Reg. 194, r. 61.06 (1); O. Reg. 465/93, s. 6.

(1.1) If an order is made under subrule (1), rules 56.04, 56.05, 56.07 and 56.08 apply, with necessary modifications. O. Reg. 288/99, s. 21

[14] The second mechanism by which security for costs can be ordered pending an appeal comes from r. 56.01, referred to above in r. 61.06 (1)(b). The Applicants submit that Rule 56.01(1)(c) applies here because the Respondent owes the sum of $13,721.21 in the underlying Application, which remains unpaid in full. Rule 56.01(1)(c) provides:

56.01 (1) The court, on motion by the defendant or respondent in a proceeding, may make such order for security for costs as is just where it appears that,

(c) the defendant or respondent has an order against the plaintiff or applicant for costs in the same or another proceeding that remain unpaid in whole or in part;

[15] In Yaiguaje v. Chevron Corp. 2017 ONCA 827; 138 O.R. (3d) 1, the Court of Appeal for Ontario confirmed that an order for security for costs is a discretionary measure. Courts should carefully consider whether such an order is “just” (at para. 19). Security for costs can be a tactic in litigation which can prevent a case from being heard on its merits. The Court of Appeal offered guidance in Yaiguaje on the relevant factors on such motions. These factors include the merits of the claim, the impact of actionable conduct by the applicant, delay in bringing the motion, the impact of actionable conduct by the applicants on the available assets of the respondent, access to justice concerns and the public importance of the litigation.

[16] The grounds of appeal here are a litany of jurisdictional and technical complaint, many related to the prior proceedings before the LTB, now withdrawn. It is unclear how these arguments might succeed on appeal. The fundamental issues before Justice Dineen were the existence of the tenancy, the failure to pay rent and the procedural question of the Respondent’s late filings, contrary to explicit direction from the court. I find that the appeal does not appear to be meritorious.

[17] The Applicants have not delayed bringing their motion, which is dated April 6, 2023, and was served less than a month after service of the Respondent’s Notice of Appeal dated March 17, 2023.

[18] The evidence on this motion is that the Respondent does not appear to have assets in his own name in Ontario. In his oral submissions, the Respondent advised the court that he does have assets, (for example, two luxury vehicles) and his net worth is in the “seven figure” order of magnitude. I infer from this that he has assets that may not be available for fulfilling a judgment unless he decides to draw on those assets. Thus, an order for security for costs would not have a disproportionate or adverse impact on his personal assets.

[19] This litigation is not of public importance, but the principles underlying it are of public importance because of access to justice concerns. The courts are charged with ensuring the orderly and timely settlement of disputes in a civil society. Attempts to frustrate, delay, or interfere with the adjudication of disputes must be seen and addressed. To do otherwise reduces public confidence in the administration of justice and causes deserving litigants unnecessary suffering. There is some evidence in the record before me that supports an inference that the significant financial prejudice suffered by the Applicants as a result of the rent arrears issues here has had consequences for their relationship.

[20] In addition to security for costs, a court may order security for judgment on appeal: Creative Salmon Company Ltd. v. Staniford, 2007 BCCA 285 at paras. 12 and 14; Wiseau Studio, LLC v. Harper, 2021 ONCA 31 at para 24. I note the caution from the Court of Appeal in Wiseau that “[s]ecurity for judgment is an extraordinary remedy that should only be granted in exceptional circumstances.”

[21] I find that the Applicants have met the tests for security for costs both in r. 61.06(1)(a) and in r. 56. 01(1)(c) and that making such an order is just. I find that the record of proceedings below, the findings of Justice Dineen and the ongoing apparent overholding without paying rent amount to “exceptional circumstances” which justify security for judgment. I find that “there is good reason to believe that the appeal is frivolous and vexatious” and that the Respondent “has insufficient assets in Ontario to pay the costs of the appeal”. Further, there is an outstanding, unpaid order for payment to the Applicants.

[22] The Applicants have submitted various alternative sums for security based on the amounts of unpaid rent, outstanding and unpaid court orders and the estimated costs of this appeal. Their requests on quantum of security range from a maximum of $194,886.87 based on all outstanding judgments and costs as well as forecasted overholding costs of occupation of the unit to a minimum of $15,000 for the estimated costs of this appeal.

[23] I conclude that in all of the circumstances a just order is based on the amounts ordered against Mr. Hitti by Justice Dineen, including the costs of the application and the estimated costs of this appeal.

[24] Accordingly, I order the Respondent, Ronald Hitti, to post security for costs and judgment in the amount of $143,886.87 within 15 days of the release of these reasons, failing which the appeal shall be dismissed.

[25] Further, I order that in addition to posting security, Mr. Hitti must pay his full monthly rent on time, pending the appeal, beginning on June 15, 2023, and until this appeal is heard. The Applicants may move to lift the stay by filing an affidavit and a motion in writing if Mr. Hitti fails to pay the full amount of rent owing on time.

[26] The timetable for the appeal will be as follows. Within 15 days of posting security for costs and judgment, the Appellant is to serve and file his materials for the appeal. The Respondents will have 15 days from that date to serve and file their materials. This appeal may be scheduled to proceed 30 days after the filing of the Respondent’s materials. All parties are to upload their materials to CaseLines in accordance with the Notice to the Profession on the court website.

[27] The Respondent is ordered to pay the Applicants $7,500 in costs, all inclusive, for this motion.

___________________________ LEIPER J.

Date of Oral Reasons for Judgment: June 1, 2023

Date of Written Release: June 2, 2023

CITATION: Faraone v. 285 Spadina SPV Inc., 2023 ONSC 3357

DIVISIONAL COURT FILE NO.: 167/23 DATE: 20230602

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

BETWEEN:

RAYMOND FARAONE AND JULIE FARAONE

Applicants/Respondents in Appeal

– and –

285 SPADINA SPV INC., RONALD HITTI, RAJA FARAH AND EDOUARD HITTI

Respondents/Appellant in Appeal

ORAL REASONS FOR JUDGMENT

LEIPER J.

Date of Oral Reasons for Judgment: June 1, 2023

Date of Written Release: June 2, 2023