Court File and Parties

COURT OF APPEAL FOR ONTARIO

DATE: 20210115 DOCKET: M51953 (C68580)

Thorburn J.A. (Motions Judge)

BETWEEN

Wiseau Studio, LLC and Tommy Wiseau d.b.a. Wiseau-Films Plaintiffs/ Defendants by Counterclaim (Appellants/ Responding Parties)

and

Richard Harper, Fernando Forero McGrath, Martin Racicot d.b.a. Rockhaven Pictures, Room Full of Spoons Inc., Parktown Studios Inc. and Richard Stewart Towns Defendants/ Plaintiffs by Counterclaim (Respondents/ Moving Parties)

Counsel: Matthew Diskin and Meredith Bacal, for the moving parties Daniel Brinza, for the responding parties

Heard: January 7, 2021 by videoconference

Reasons for Decision

Relief Sought

[1] This is a motion by the moving parties Richard Harper, Fernando Forero McGrath, Martin Racicot d.b.a. Rockhaven Pictures, Room Full of Spoons Inc., Parktown Studios Inc. and Richard Stewart Towns (together “Room Full of Spoons”) for security for the trial judgment, costs of the judgment and appeal and in the alternative, an order to lift the stay pending appeal.

[2] The security amounts are as follows:

1. Security for the trial judgment in the amount of $200,000 CDN and Canadian currency sufficient to purchase $575,488.36 at a bank in Ontario listed in Schedule I to the Bank Act (Canada) at the close of business on the first day on which the bank quotes a Canadian dollar rate for purchase of the foreign currency before the day payment of the obligation is received;
2. Security for costs of trial judgment in the amount of $481,521.80 CDN; and
3. Security for costs of the appeal in the amount of $30,000.

[3] Room Full of Spoons claims that although security for judgment has not been awarded by an Ontario court, the unique circumstances of this case warrant security for the judgment awarded and has been awarded by courts in other Canadian jurisdictions. Room Full of Spoons also notes that the British Columbia and Alberta courts have granted security for judgment in similar circumstances.

Background Evidence

[4] In 2003, Wiseau Studio LLC and Tommy Wiseau, doing business as “Wiseau Films” released a feature film called The Room. The Room and its creator, Tommy Wiseau, acquired cult-like status. Wiseau Studio and Tommy Wiseau are residents of California.

[5] Richard Harper, Fernando Forero McGrath, Martin Racicot and Richard Stewart Towns are Ontario documentary filmmakers. In 2016, after years of work, they completed a documentary film called Room Full of Spoons about the cult phenomenon surrounding The Room and Mr. Wiseau (the “Documentary”). Room Full of Spoons’ only material asset is the Documentary.

[6] Room Full of Spoons have not been able to exploit the Documentary since Wiseau Films brought a claim against them in 2017.

[7] On June 14, 2017, Wiseau Films obtained an ex parte injunction restraining the release of the Documentary while, unbeknownst to the court, it was in negotiations with Room Full of Spoons about the Documentary’s release.

[8] On November 1, 2017, the injunction was dissolved as the motion judge held that Wiseau Films had failed to make full and frank disclosure and engaged in litigation misconduct. Room Full of Spoons was awarded substantial indemnity costs of $97,034.68.

[9] The cost award was not paid for 11 months and was paid only after the court advised that Wiseau Films’ claim would be dismissed if the cost award was not satisfied.

[10] Thereafter, the case management judge found that Wiseau Films engaged in “roadblocks to scheduling at almost every attendance” and other improper acts. These include:

(a) The injunction was issued at a “commercially critical time” when the parties were on the verge of finalizing a distribution deal which was prevented by the injunction such that the lawsuit had the effect of blocking the release of the documentary; (b) Wiseau stated falsehoods about the defendants on social media and made misrepresentation to third parties about the legality of screening the documentary; (c) Both sides agreed to file affidavits from their witnesses regarding their anticipated testimony in chief. Thereafter, Wiseau Films sought an order from the case management judge to direct the Crown to prosecute the defendants for perjury based on their affidavits, although he never identified what was allegedly false. The request was refused; (d) Seeking to adjourn the trial on the eve of trial on the grounds that Wiseau Films no longer had counsel. The case management judge held this was “a situation entirely of their own making and one about which [he had] warned Mr. Wiseau on many occasions”. Since February 2019, the case management judge had dealt with three different motions by three sets of counsel for Wiseau Films asking to be removed from the record; and (e) On the eve of trial, sending the judge and opposing counsel a document entitled “Total Withdraw” purporting to discontinue his claims. In the document, Wiseau Films attacked the Ontario justice system and stated that a new action would be brought in another jurisdiction for the same relief. (The request was refused.)

[11] Following an eight-day trial in January 2020, Wiseau Films’ claim was dismissed and judgment granted in favour of Room Full of Spoons on the counterclaim. The judgment was thorough and comprehensive.

[12] Room Full of Spoons was awarded $200,000 in punitive damages (in large part for litigation misconduct), $550,000 USD in damages arising from the improper ex parte injunction, $25,488.36 USD in pre-judgment interest, and $481,521.80 CDN in costs.

[13] Thereafter, Wiseau Films’ request to vary the judgment was dismissed with costs to Room Full of Spoons in the amount of $20,000 CDN. In his reasons, the trial judge refused to allow evidence from witnesses that testified at trial and that could and should have been adduced at trial. He also noted that,

Nothing presented on this motion suggests that my Reasons for Judgment were based on misleading evidence or that there is any other reason to reconsider my decision or reopen the trial. Rather, this motion raises the same concerns referred to by Koehnen J. prior to trial, that the plaintiffs seek to delay justice for the defendants at every turn.

Once again, Wiseau also complains of the Ontario justice system being unfair to him as “an American citizen doing litigation in a foreign and unfamiliar jurisdiction.” This claim, and other criticisms of the Ontario courts was made by Wiseau in advance of trial and also at the outset of the trial. However, Wiseau chose to bring this action in Ontario, and no doubt was quite content with our system of justice when he obtained his ex parte injunction. I am not aware of any way in which he has been treated differently than if he were a resident of Ontario or a citizen of Canada.

In my view, this motion has no merit and is yet another tactical attempt by Wiseau to delay and obstruct the release of Room Full of Spoons.

[14] Thereafter, Mr. Wiseau failed to attend examinations in aid of execution, or court Orders compelling his attendance to provide information about his assets. Counsel for Wiseau Films advised that,

As for the location of the assets which could be used to satisfy any judgment … the bulk of my clients’ assets may be located outside Ontario, namely in the USA. As you are aware, should you wish to proceed with execution against any US-based assets, the proper procedure for your side would be to convince a US court of proper jurisdiction to endorse the judgments and orders issued by the Ontario courts.

[15] Mr. Wiseau refused to say whether a sizeable real estate asset called the Pico Property, which was the only known address for Mr. Wiseau, was still his address and said it was “laughable” to ask. No information has been provided about any Wiseau Films assets or their whereabouts save for the bald assertion that Wiseau Films can satisfy any judgment award.

[16] Wiseau Films has now brought a Notice of Appeal of the trial judgment. Wiseau Films’ counsel does not dispute that the Amended Amended Notice of Appeal, which grounds provide only that the court below erred in dismissing his various claims, is frivolous on its face. He suggested however that there was still time to further amend the Appeal.

The Positions of the Parties

[17] Room Full of Spoons claims costs of the judgment and security for costs of the trial and appeal on the grounds that there is no evidence that Wiseau Films or any of its assets is in the jurisdiction or that Wiseau Films would agree to pay any order of this court. Room Full of Spoons also submits that Wiseau Films’ improper behaviour in making numerous tactical attempts to obstruct and delay these proceedings, and its frivolous appeal, justify the relief sought.

[18] Room Full of Spoons claims these actions are clear evidence that, having chosen to commence legal proceedings in Ontario, Wiseau Films does not intend to comply with an Ontario court order and that security for judgment and costs is therefore required.

[19] Wiseau Films disputes the motion for security for judgment and/or costs as they claim justice does not demand that security be granted and the losing party should be entitled to avail itself of due process and any and all protections afforded to a judgment debtor.

[20] Counsel for Wiseau Films conceded on this motion that the grounds of appeal set out in the Notice of Appeal are frivolous as they are entirely conclusory. He stated however, that they are not vexatious as there is no stated intention to refuse to pay any amounts deemed owing nor is there evidence Wiseau Films cannot satisfy a judgment and or costs award.

[21] Lastly, Wiseau Films submits that to enable Room Full of Spoons to obtain information about its assets would constitute execution before final judgment. Such an order for security for judgment has never been granted in Ontario, which suggests it is not appropriate to do so absent exceptional circumstances which are not present in this case.

Analysis

(1) The First Issue: Security for Trial Judgment

[22] Section 134(2) of the Courts of Justice Act, R.S.O. 1990, c. C.43 (“CJA”) provides that, “On motion, a court to which a motion for leave to appeal is made or to which an appeal is taken may make any interim order that is considered just to prevent prejudice to a party pending the appeal.”

[23] Rule 1.05 of the Rules of Civil Procedure R.R.O. 1990, Reg. 194, provides that, “When making an order under these rules the court may impose such terms and give such directions as are just.”

[24] Security for judgment is an extraordinary remedy that should only be granted in exceptional circumstances: Vaillancourt v. Cater, 2017 ABCA 282, at para. 20; Aetna Financial Services Ltd. v. Feigelman, [1985] 1 S.C.R. 2 at p. 10; C.H. v. M.H., 1997 ABCA 263, 53 Alta. L.R. (3d) 80 (sub nom Hamza v. Hamza), at para. 24.

[25] Such an order requires an appellant to post security for judgment before continuing with the appeal. In this way, security for judgment functions much like a Mareva injunction and restrains the appellant from disposing of or dissipating assets in order that they be available to satisfy the judgment should it be upheld and if security for judgment is ordered and not posted, the appeal is dismissed: Vaillancourt, at. para. 20; Vaccaro v. Twin Cities Power-Canada U.L.C., 2013 ABCA 252, 97 Alta. L.R. (5th) 193, at para. 14.

[26] Security for judgment has been granted in other jurisdictions in the following circumstances:

1. Where there are no assets in the jurisdiction against which to enforce a judgment and the appeal has little merit (Vaccaro at para. 11; Creative Salmon Company Ltd. v. Staniford, 2007 BCCA 285, at paras. 12 and 14; Richland Construction Inc. v. Manningwa Developments Inc. at paras. 12-13);
2. To preserve assets that would otherwise be destroyed, disposed of, or dissipated prior to the resolution of the dispute: Aetna Financial at p. 12); and
3. To encourage respect for the judicial process and avoid abuse of process (C.H., at para. 23, citing Mooney v. Orr (1994), 100 BCLR (2d) 335 at p. 348 (B.C. S.C.); Vaccaro at paras. 12-14; and in respect of Mareva injunctions, Aetna Financial at pp. 13-14).

[27] In First Majestic Silver Corp. et al. v. Davila, 2013 BCCA 312, the court invoked s. 10(2)(b) of the British Columbia Court of Appeal Act, R.S.B.C. 1996, c. 77, a provision with similar wording to that in s. 134 of the CJA which provides that “In an appeal or other matter before the court, a justice may … (b) make an interim order to prevent prejudice to any person”. The court ordered that appellants who resided out of the jurisdiction without assets in the jurisdiction post security for the trial judgment, failing which the respondents were granted leave to apply to have the appeal dismissed as abandoned. In so doing, the court set out the principles governing the exercise of discretion in ordering security for a trial judgment:

1. The onus is on the applicant to show that it is in the interest of justice to order posting for security of a trial judgment and/or of trial costs.
2. The applicant must show prejudice if the order is not made.
3. In determining the interests of justice the chambers judge should consider the merits of the appeal and the effect of such an order on the ability of the appellant to continue the appeal. (See also Vaillancourt, at para. 24).

[28] The interests of justice may include a consideration of the ex juris residence of an appellant and therefore the effective immunity of an appellant from enforcement of the judgment: First Majestic Silver Corp. et al., at para. 16; Paz v. Hardouin, at paras. 22. They may also include a consideration of the ability to enforce the judgment in the appellant’s ex juris jurisdiction and/or the absence of assets in the jurisdiction in which the judgment was rendered: First Majestic Silver Corp. et al., at para. 16; Cadinha v. Chemar Corp. Inc., at paras. 5-7.

[29] The interests of justice may not be relied upon by a successful plaintiff where the effect of requiring the posting of security for a trial judgment would be to preclude a party from pursuing the appeal: Kedia v. Shandro Dixon Edgson, 2007 BCCA 316, 243 B.C.A.C. 80, at para. 39, relying on Chan v. Vancouver Trade Mart Ltd., at para. 10.

[30] However, in Creative Salmon, Lowry J.A. held at para. 12 that:

[A]dverse financial circumstances will generally not defeat an application for security where an appeal is virtually without any merit. A successful plaintiff should not be required to respond to an unmeritorious appeal when there is no real prospect of recovery.

[31] A finding that an appeal has no reasonable prospect of success may be a factor: see Richland Construction Inc., at para. 8.

[32] For the reasons set out below, I find that this is one of those rare and exceptional circumstances where an order for security for judgment is warranted.

[33] First, Wiseau Films is out of the jurisdiction. Wiseau Films refused to advise if it has any assets in the jurisdiction and the only reasonable inference therefore is that there is no evidence that Wiseau Films have any assets in the jurisdiction. Moreover, Wiseau Films concedes there is no issue that paying security for judgment and or costs would prevent Wiseau Films from pursuing its appeal. As such, the interest of justice onus is met.

[34] Second, there is evidence that Room Full of Spoons will suffer prejudice if the order is not granted:

1. On several occasions, both the case management and trial judges have noted that there were numerous “tactical attempt(s) by Wiseau to delay and obstruct the release of Room Full of Spoons.” Those actions are set out at paragraph 10 above;
2. Room Full of Spoons spent years producing their documentary film and it has now been over four years since the completion of the film during which there has been a cloud on title such that they have been prevented from airing the documentary;
3. A significant judgment award may never be recovered if the order is not granted.

[35] Although Wiseau decided to commence legal proceedings in Ontario (and is therefore required to abide by the rules of the Ontario courts), Wiseau Films has demonstrated no intention to pay an award ordered by this court. Mr. Wiseau said it was “laughable” to ask if the sizeable Pico Property, which was the only known address for Mr. Wiseau, was still his address and suggests that if his appeal is not successful, Room Full of Spoons should commence proceedings in the United States to recover the judgment. It is also telling that, although Wiseau Films did pay the costs ordered against him for bringing an improper ex parte order, he did so only after the court ordered that if he failed to pay the award, his action would be dismissed.

[36] Third, it is agreed that as presently drafted, the Amended Amended Notice of Appeal is frivolous and does not articulate what errors were made in the comprehensive reasons provided by the trial judge.

[37] I am therefore satisfied that although this is a remedy that should be invoked sparingly, the interests of justice weigh in favour of granting the order for security for judgment.

[38] Accordingly, the appellants are ordered to post security for the trial judgment within 90 days of this order, with liberty to apply for further directions on the form of the security, if necessary. If the appellants fail to comply with this order, Room Full of Spoons are granted leave to apply for an order dismissing the appeal as abandoned.

(2) The Second Issue: Security for Costs

[39] This court may order security for costs pursuant to Rule 56.01 of the Rules of Civil Procedure where,

(a) the plaintiff or applicant is ordinarily resident outside Ontario; (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; (d) the plaintiff or applicant is a corporation or a nominal plaintiff or applicant, and there is good reason to believe that the plaintiff or applicant has insufficient assets in Ontario to pay the costs of the defendant or respondent; or (e) there is good reason to believe that the action or application is frivolous and vexatious and that the plaintiff or applicant has insufficient assets in Ontario to pay the costs of the defendant or respondent.

[40] As noted above, the Wiseau Films parties are ordinarily resident outside of Ontario and there is good reason to believe Wiseau Films has insufficient assets in Ontario to satisfy the awards. Wiseau Films has refused to adduce evidence of any assets in Ontario or any evidence that, having elected to proceed in Ontario, it would pay any amounts ordered by Ontario courts unless and until ordered by a United States court. Moreover, there is evidence that the proceeding is vexatious given the circumstances surrounding the ex parte order, the conduct prior to trial set out above, and Wiseau Films’ concession that the appeal is frivolous.

[41] Taken together, there are ample grounds to support an order for security for costs of the trial and appeal pursuant to section 56 of the Rules of Civil Procedure.

[42] Given the above and extension of the delay for release of the Documentary, Wiseau Films should post funds into court: Health Genetic Center Corp. (Health Genetic Center) v. New Scientist Magazine, 2019 ONCA 576 at paras. 8-11. This Court has the jurisdiction to do so pursuant to s. 134(2) of the Courts of Justice Act and Rule 1.05 of the Rules of Civil Procedure.

Conclusion

[43] For the above reasons, the motion is granted.

[44] In accordance with the agreement between the parties, costs are awarded to the moving parties Room Full of Spoons in the amount of $3,500.

“J.A. Thorburn J.A.”