Court File and Parties

COURT FILE NO.: CV-15-522655 DATE: 2019/02/28 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: ADAMS, Plaintiff AND: ADAMS, NEEDLES et al., Defendants

BEFORE: MASTER RONNA M. BROTT

COUNSEL: Gordon McGuire, for the Plaintiff Colin Pendrrith & D. DiPardo, for the Defendants George and Susan Needles

HEARD: November 1, 2018

Endorsement

Facts

[1] The plaintiff, Nisha Adams, is the former wife of the defendant Caleb Adams (“Caleb”) and she is the mother of their four children aged 7 to 17. The couple met in 1997, married in 2005 and later that year they moved into the home of Caleb’s parents, the defendants, Susan Needles and George Needles (“Needles”).

[2] The plaintiff and Caleb entered into a written “rent-to-own” agreement (“the agreement”) with the Needles dated October 16, 2005 regarding the Needles home. In 2009 the agreement was modified to contain a formula for the calculation of how much equity the Needles retained and how much belonged to the plaintiff and Caleb. In 2011, at age 33, the plaintiff was diagnosed with an autoimmune disorder and she was declared unable to continue her work as an elementary school teacher.

[3] From 2005 to 2014 the plaintiff and Caleb lived in the home and successfully paid off the mortgage. They also paid the carrying costs and completed some renovations. Marital issues surfaced after her medical issues began, culminating with their separation in June 2014 after an incident in which the police were called. Several months later, the Needles evicted the plaintiff from the home with her four children. The Needles paid her nothing pursuant to the agreement and both George and Caleb denied the existence of any agreement.

[4] When the plaintiff learned that the Needles had begun preparations to sell the home, she commenced this action on February 24, 2015 seeking an interest in the Needles’ home pursuant to the agreement. On March 31, 2015 the plaintiff obtained an ex parte order granting leave to issue a Certificate of Pending Litigation (“CPL”). The defendants’ motion to set aside the CPL on the basis of non-disclosure was dismissed on November 4, 2015 with costs of $7500.00 payable by the defendants to the plaintiff. On appeal on June 28, 2016, Justice Dunphy found that the plaintiff had failed to make full and frank disclosure on the ex parte motion and he allowed the appeal. He ordered the plaintiff to pay costs of $24,805.22. To date, despite numerous requests from the defendants, the plaintiff has not paid the costs.

[5] Over and above this civil action, the plaintiff and Caleb have been involved in family law proceedings – both seeking custody, ancillary orders and child support. The plaintiff was granted custody and the children have, since 2015, resided full-time with the plaintiff – with Caleb having limited access. Caleb was ordered to pay child support. Four costs awards were made against Caleb in the family proceeding for a total of $39,827.52 of which $33,574.37 remains owing to the plaintiff.

[6] In February 2017 plaintiff’s counsel requested answers to the undertakings given at the defendants’ examinations for discovery held in June 2016. Defence counsel refused to take any steps in the action until the plaintiff’s costs were paid.

[7] In October 2017 the plaintiff sought to move for summary judgment based on the 2009 agreement but the civil practice court judge declined to schedule the motion on account of both the plaintiff’s unpaid costs and the fact that she was moving for partial summary judgment only.

[8] When the plaintiff attempted to schedule a mediation, the defendants refused on the basis that the costs remain unpaid.

The Motion

[9] On March 12, 2018, the plaintiff served this motion to compel the defendants to attend at mediation. The defendants served their cross-motion seeking to dismiss or stay the action on October 23, 2018.

[10] The issues on these motions are whether the parties should be compelled to proceed to mediation and/or whether the court should dismiss or stay the plaintiff’s action.

[11] Rule 24.1 of the Rules of Civil Procedure creates a scheme of mandatory mediation premised on a mediation session being held within 180 days from the date on which the first defence is filed unless the court orders otherwise. The principle behind the rule is consistent with the overriding principle of Rule 1.04(1) which provides: “These rules shall be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits”. Rule 24.1.01 states the purpose of mandatory mediation is “to reduce cost and delay in litigation and to facilitate the early and fair resolution of disputes”.

[12] In considering whether the court should extend or abridge the timeline of a mandatory provision, the court is directed by Rule 24.1.09(2) to take into account a variety of circumstances including inter alia, whether “(d) the nature of the case or the circumstances of the parties, the mediation will be more likely to succeed if the 180-day period is extended or abridged.”

[13] Pursuant to Rule 57.03(2) and Rule 60.12 of the Rules of Civil Procedure, the court has authority to dismiss or stay an action where a party has failed to pay a costs award or to make such other order as is just. Whether to dismiss or stay an action for failure to pay a costs order is discretionary and fact-based. In Rana v Unifund Assurance Company, 2016 ONSC 2502 at para 50 Justice Dunphy set out the following summary of principles to guide the court in exercising its discretion under Rule 57.03(2) and 60.12:

a. Where there has been non-compliance with an order of the court, the court should be alive to the possibility that its process is being abused; failing to act may deprive the moving party of justice according to law and risks rendering the court a paper tiger: Bottan v Vroom, at para. 24-25; b. The right of access to the courts must be accompanied by the responsibility to abide by the rules of civil procedure and to comply with orders of the court – to exempt impecunious parties from the enforcement of costs orders when made would amount to granting “carte blanche to continue to ignore the rules and orders of the court and take unsupportable steps in the action without fear of consequences” per Master Dash in Heu v Forder Estate, 2011 ONSC 16198 at para. 19-20; c. The court ought not to sit in appeal of the prior costs awards – the respondent will have had the opportunity to make submissions about impecuniosity at the prior hearings that resulted in the costs orders and seeking to relieve against prior costs orders constitutes a collateral attack on orders previously made; Bottan v Vroom, at para 23; Visic v University of Windsor, 2013 ONSC 2063 at paras. 36 and 66; Trewin v MacDonald, [2008] O.J. No. 2821 (ONSC) at para. 26; d. The court may have regard to a pattern of unnecessary and unreasonable steps taken in the proceeding, including appealing numerous orders without chance of success or knowing the risk thereby imposing costs upon the other party: Visic v University of Windsor at para. 68; e. If the orders of the court are “cavalierly ignored” and if a litigant “continuously fails to comply with her obligations as a litigant and then fails to abide by the costs consequences attendant upon that behaviour, the court is justified in bringing some finality to the action” (per Master Dash in Burrell v Peel (Regional Municipality) Police Services Board, 2007 ONSC 46173 at para 63; aff’d 2010 ONSC 1387); f. Impecuniosity is not a shield for unreasonable conduct of litigation and a dismissal order may be made even if it resolves the matter on procedural rather than substantive grounds: Baradaran v Tarion Corp., 2014 ONSC 6870; g. Self-represented litigants, while entitled to some accommodation and assistance to ensure a fair hearing, are not entitled to abuse the system or the party opposite and failure to enforce orders once made against self-represented parties is unfair to the parties opposite and undermines respect for the court and the civil justice system; per Myers J. in Baradaran v Tarion Corp., 2015 ONSC 7892; Bilich v Toronto (City) Police Services Board, 2014 ONSC 6765; h. “Courts usually talk in terms of prejudice that cannot be compensated for by costs. But, at some point, costs themselves become an inadequate form of compensation for prejudice, especially where the party on whom they are imposed refuses to pay them”; per D.M. Brown J.A. in Schwilgin v Szivy, 2015 ONCA 816 at para 23.

[14] In this case, the parties have not attended mediation. As well, the plaintiff has not complied with the costs order to pay to the Needles the sum of $24,802.22 within thirty days of the date of the order which was made on June 28, 2016.

[15] The defendants submit that the plaintiff’s refusal to pay costs amounts to a collateral attack on Justice Dunphy’s order as she never appealed Justice Dunphy’s decision. It is noteworthy that at the time of the motion before Justice Dunphy, the defendants’ position was that the plaintiff was not entitled to anything under the 2009 agreement, or on a quantum meruit basis. George and Caleb actually denied the existence of any agreement. The three defendants were examined for discovery two days after the release of Justice Dunphy’s decision and George Needles conceded under oath that the plaintiff is owed, at a minimum, $23,500.00 and “maybe” some additional amounts. The Needles have nonetheless failed to pay to the plaintiff anything pursuant to the agreement.

[16] The defendants also dispute the plaintiff’s assertion that she lacks the means to pay the costs award. They assert that the plaintiff has clearly chosen not to make contributions towards the costs award and has instead prioritized other things in her life. They continue to demand additional documentation which the plaintiff relies on in support of her allegation of impecuniosity. It is the plaintiff’s evidence that she has only three assets:

(a) The equity in the home pursuant to the 2009 agreement; (b) The unpaid costs owing by Caleb within the family law proceedings; (c) Her Registered Disability Savings Plan.

The plaintiff alleges with respect to (a) and (b) that it is due to the defendants’ refusal to pay her that she is unable to pay costs. And, with respect to (c), she alleges that she would suffer financial penalty if she withdrew funds from her disability plan.

[17] Courts have held that impecuniosity is not a shield against costs sanctions. The plaintiff concurs and submits that she wants to and intends to make payment but asserts that to do so, she must first receive her fair share of the home – at which time she will have the monies to pay the costs. The plaintiff agrees that there is a strong public interest in ensuring costs orders are complied with and paid. However, she urges the court to be wary of a party (Caleb) who will benefit from his parents’ seeking to stay or dismiss this claim when Caleb himself is in breach of costs orders in a related proceeding. The plaintiff accordingly submits that it is preferable for the claim to proceed to mediation and for the costs award to be paid out of settlement proceeds in the action.

[18] When determining if an action should be stayed or dismissed, the court must consider the different interests and must weigh fairness and justice. In exercising this discretion, the court may take into account the interest of the administration of justice in ensuring court orders are followed, (Garrett v Oldfield, 2016 ONCA 424, [2016] O.J. No. 3067 (C.A.)), the moving party’s interest in compensation (Ibid), the respondent’s interest in having access to justice, (Augier v O’Reilly, 2011 ONSC 4583, [2011] O.J. No. 3468 (S.C.J.)) and the merits of the action (Tarion Warranty Corporation v 1486448 Ontario Inc., 2012 ONCA 288, [2012] O.J. No 1930 (C.A.)). As the Court of Appeal noted in Dang v Anderson, 2017 ONSC 1420, [2017] O.J. No 1068 (S.C.J.) “as is always the case when there are competing interests, the goal is to strike a balance.”

[19] It is the court’s responsibility to make an order as is just. Rule 24.1 makes it mandatory to attend a mediation within 180 days of the filing of a defence. The parties have failed to comply with that requirement. In the circumstances of this action, a mediation may well serve to reduce the cost and delay of the proceeding and may serve to facilitate a fair resolution of this dispute. The plaintiff served her motion to compel the mediation in March 2018, prior to service of the defendants’ service of their cross-motion on October 23, 2018 to stay or to dismiss the action.

[20] It might be said that by the defendants moving to stay or to dismiss the action at this time, the defendants are using the system for their own litigation advantage – even when they concede that some monies are owed to the plaintiff and she possibly has a share to even more than what it currently conceded by George Needles. On the other hand, it is the defendants’ view that even if the parties are ordered to mediation, the plaintiff is simply delaying her payment of costs and she will not, in good faith, attempt to resolve the action at a mediation.

[21] Taking into account the two motions and the competing interests and fairness, it is ordered that this action shall continue at this time for the sole purpose of compelling the parties to attend mediation. This court is certainly not condoning a party’s refusal to obey the costs order of Justice Dunphy, but takes into consideration the plaintiff’s explanation of her inability to comply with the Order, the fact that her ex-husband, one of the defendants, actually has unclean hands as he himself has an outstanding costs award in a related proceeding, and the evidence of George Needles which confirms that there is merit to the plaintiff’s claim.

[22] I do not have jurisdiction to, for example, order a set-off of Caleb and the plaintiff’s costs. However, it is ordered that the issue of all outstanding costs shall be addressed at the mediation. The mediation shall be conducted within four months on a mutually agreeable date, with a mediator to be agreed upon. Only if the mediation is unsuccessful will I release reasons in regards to the defendants’ cross-motion to stay or dismiss the action.

[23] Costs of the motions shall either be addressed at the mediation or if necessary, when my reasons on the defendants’ motion are released.

MASTER RONNA M. BROTT Date: February 28, 2019