Court File and Parties

COURT FILE NO.: CV-18-605912 DATE: 2023 10 03

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: VEM YENOVKIAN, Applicant - and - SHIRTLIFF-HINDS PROFESSIONAL CORPORATION, Respondent

BEFORE: Associate Justice Todd Robinson

COUNSEL: F. Dickson, for the respondent R. Plate, for the applicant

HEARD: September 29, 2023

REASONS FOR DECISION (Motion for Security for Costs)

[1] The respondent law firm brings this motion for an order requiring the applicant to post security for costs on two grounds: (i) the applicant is ordinarily resident outside Ontario, and (ii) there is good reason to believe that the application is frivolous and vexatious and that the applicant has insufficient assets in Ontario to pay the respondent’s costs. The respondent seeks $25,000 in security for costs for the pending assessment hearing under the Solicitors Act, RSO 1990, c S.15.

[2] I find that an order for security for costs would not be just in the particular circumstances of this case. I am dismissing the motion.

[3] The respondent law firm moves for security for costs under subrules 56.01(1) (a) and (e) of the Rules of Civil Procedure, RRO 1990, Reg 194 (the “Rules”), which provides as follows:

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,

(a) the plaintiff or applicant is ordinarily resident outside Ontario;

(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;

[4] The applicable test for security for costs is well-settled and not disputed. Granting security for costs is a discretionary decision. The initial onus is on the moving party to demonstrate that the responding party fits within one or more of the provisions of subrule 56.01(1) of the Rules. That “triggers the enquiry” into security for costs, which involves considering a number of factors and make the order that is just in the circumstances of the particular case: Yaiguaje v. Chevron Corporation, 2017 ONCA 741 at para. 25; Parravano v. St. Paul Fire and Marine Insurance; 2023 ONSC 3480 at paras. 13-14.

[5] The Court of Appeal has confirmed that determining the justness of a security for costs order requires a holistic approach, in which all the circumstances of the case are examined. On this motion, my assessment is to be guided by the overriding interests of justice. Although various factors have been outlined by courts to be considered, such as merits of the claim, delay in bringing the motion, the impact of a defendant’s conduct on the available assets of the plaintiff, access to justice concerns, and the public importance of the litigation, those factors are not static. Each case must be considered and decided on its own facts: Yaiguaje v. Chevron Corporation, 2017 ONCA 827 at paras. 22-25.

[6] The Court of Appeal has also directed that courts be vigilant to ensure that security for costs, which is designed to be protective in nature, is not used as a litigation tactic to prevent a case from being heard on its merits, even in circumstances where the other provisions of rule 56 have been met: Yaiguaje v. Chevron Corporation, 2017 ONCA 827 at para. 23.

[7] With respect to relief under subrule 56.01(1) (e), the respondent did not pursue it in oral submissions. It has not met its threshold onus in any event. The respondent has the onus of establishing good reason to believe that the applicant lacks sufficient assets in Ontario. As the respondent conceded at the hearing, it has tendered no evidence on the applicant’s assets. The absence of evidence from the applicant is not sufficient since the applicant has no evidentiary onus until the respondent has met its threshold onus. I am not prepared to infer solely from the applicant’s non-residency that he has no or insufficient assets in Ontario.

[8] With respect to relief under subrule 56.01(1) (a), the respondent has met its initial onus. The applicant admits he is a non-resident. Having met that initial onus, the onus shifts to the applicant to establish that an order for security for costs would not be just in the circumstances of this case. In my view, the applicant has met his onus. An order for security for costs would not be just in the circumstances of this particular case.

[9] The applicant argues that the respondent delayed in bringing this motion, which he submits supports denying a security for costs order. The respondent argues that I should reject that argument because there has been no delay and, even if there was delay in bringing this motion, there has been no prejudice to the applicant.

[10] I disagree with the respondent. I find that the respondent has unreasonably delayed in bringing this motion. That delay is, in my view, a significant factor and one that is appropriately considered: Burton v. Aronovitch Macaulay Rollo LLP, 2018 ONSC 506 at para. 17. I also reject the respondent’s submission on prejudice. In my view, demonstrable prejudice is not a strict requirement when applying the holistic approach directed by the Court of Appeal for security for costs motions.

[11] This solicitor fee assessment was commenced by the applicant in September 2018. The parties have proceeded through numerous steps. A mediation proceeded on October 2, 2019. Although not addressed in the parties’ materials, the case history indicates that, after the mediation was unsuccessful in resolving the matter, the assessment officer scheduled a four-day assessment hearing for July 20-23, 2020. As a result of the COVID-19 pandemic, the assessment hearing was adjourned by the court. A preliminary appointment ultimately proceeded on December 22, 2021, at which the presiding assessment officer scheduled a five-day assessment for June 20-24, 2022.

[12] Following that hearing, the respondent moved to quash the order for assessment. That motion came first before McGraw A.J. in May 2022, who adjourned it sine die for the parties to either provide a basis for an associate judge’s authority to grant the relief or attend Civil Practice Court. The motion was ultimately heard and dismissed by Morgan J. in September 2022. After that dismissal, this security for costs motion was brought.

[13] The respondent submits that it was reasonable to proceed with the mediation first, that the pandemic intervened, that security for costs was raised while the motion to quash remained pending, and that this motion was brought promptly after the motion to quash was dismissed. The respondent also argues that, until Morgan J.’s decision was rendered, the assessment proceeding had not been legitimized. It submits that it acted reasonably in awaiting disposition of the motion to quash before proceeding with a further motion.

[14] Although the respondent points to uncertainty over where the applicant currently resides and has resided, it is evident that the applicant has not been resident in Ontario (or Canada) throughout most (if not all) of this proceeding. The affidavit of Carol Shirtliff-Hinds outlines that the applicant was ordinary resident outside of Ontario in 2019, pointing to comments on his residency made by Kristjanson J. in a prior decision and a complaint filed by the applicant in the Southern District of California. The reply affidavit of Carol Shirtliff-Hinds seeks to imply that it was unclear that the applicant was not a resident of Ontario until September 2022, but that suggestion appears contrary to the first affidavit, which clearly indicates a belief that the applicant has not been a resident of Ontario since at least 2019.

[15] Nothing before me supports that the respondent genuinely believed that the applicant resided in Ontario at any point during the course of this assessment. It appears undisputed that the respondent was aware that the applicant was a non-resident at the mediation in October 2019. Nevertheless, security for costs was not raised by the respondent until May 2022, some three and a half years after this assessment proceeding was commenced. Even after raising it, nothing substantive was done until after September 2022, when the respondent’s motion to quash was dismissed.

[16] The pandemic is regularly relied upon by parties as excusing delay. Unquestionably it had a broad-reaching impact, but regular court operations were only suspended for the period of March to September 2020. As already noted, a mediation occurred in October 2019. The assessment was scheduled to proceed in July 2020. If the respondent was genuinely concerned about security for costs, then that concern ought reasonably to have been raised prior to March 2020. Had the applicant refused to post security (as he has now done), then a motion would need to have been booked, brought, and heard in advance of the scheduled assessment hearing. However, as noted, there is no evidence of any concern about security for costs being raised before the July 2020 hearing dates were adjourned by the court.

[17] When regular court operations resumed in September 2020, albeit with predominantly remote hearings, the respondent still did not raise security for costs. A preliminary hearing was scheduled for April 2021, but adjourned due to technical problems. It later proceeded on December 21, 2021. There is no evidence that security for costs or any related concern about costs of this proceeding was raised with the presiding assessment officer.

[18] The respondent has further failed to explain why, if security for costs was a genuine concern all along, alternative relief seeking security for costs was not sought when it brought the motion to quash. Security for costs was raised for the first time after McGraw A.J. questioned his jurisdiction to hear the motion to quash and adjourned it sine die.

[19] The respondent relies on the decision in Stojcic v. City of Toronto, 2017 ONSC 4861 at paras. 8-9 as support for its argument that the applicant must demonstrate at least some prejudice from the alleged delay in bringing this motion. The respondent submits that there is no evidence of prejudice.

[20] I reject the respondent’s submission that the applicant must demonstrate prejudice. In my view, there is no black and white rule that a party resisting security for costs on the basis of delay must demonstrate actual prejudice arising from the delay. To impose such a strict requirement would be contrary to the discretionary nature of these motions, in which the court holistically examines the facts and circumstances of the particular case before them to determine if security for costs is just.

[21] Moreover, in Stojcic, Master Graham (as then titled) did not hold that a party opposing security for costs must demonstrate prejudice arising from delay. Rather, he held only that delay in bringing the motion and prejudice arise from the delay are both relevant factors to be considered by the court. I agree with that statement. Evidence (or lack thereof) of prejudice is a factor, but only one factor.

[22] Because this motion is brought in an assessment proceeding under the Solicitors Act, the purpose of the Solicitors Act is also a relevant factor. In my view, the context of an assessment distinguishes this case from most of the case law put before me.

[23] The Solicitors Act is legislation that protects the public in their dealings with members of the legal profession and provides a fair procedure for assessment of a solicitor’s account: Axess Law Professional Corp. v. Sood, [2018] OJ No 559, 2018 ONSC 744 (Div Ct) at paras. 22-24. In Price v. Sonsini, the Court of Appeal commented that, as a general matter, if a client objects to a solicitor’s account, then the solicitor should facilitate the assessment process rather than frustrating it. Courts should interpret legislation and procedural rules relating to the assessment of solicitors’ accounts in a similar spirit, since if a court permits lawyers to avoid the scrutiny of their accounts for fairness and reasonableness, the administration of justice will be brought into disrepute: Price v. Sonsini at para. 19. In the same vein, when dismissing the respondent’s motion to quash, Morgan J. observed that judicial discretion is generally to be used to facilitate a client’s assessment of a lawyer’s account: Yenovkian v. Shirtliff-Hinds Professional Corporation, 2022 ONSC 5270 at para. 15.

[24] The respondent points to Kramer Henderson Sidlofsky LLP v. Monteiro, 98 OR (3d) 286 (ON SC) as support for awarding security for costs in a Solicitor Act assessment. In that case, Thorburn J. (as she was then) held that the moving party solicitors were entitled to security for costs. However, the case does not assist the respondent. It dealt with an appeal from a master’s decision finding that the court had no jurisdiction to award security for costs of a solicitor and client assessment because an assessment was not a “proceeding” within the meaning of subrule 56.01(1) of the Rules. Thorburn J. held that the decision was incorrect and that security for costs was available in an assessment. The decision does not engage in any evaluation of the factors militating for or against security for costs. As set out at para. 6 of the decision, the parties had agreed that the moving party would be entitled to security for costs but for the fact that it was an assessment.

[25] In this case, it is common ground that the only step remaining in this proceeding is the assessment. I agree with the applicant that the record supports that he has invested time and money advancing this proceeding to this point. I am further satisfied that there is merit to the applicant’s assessment. I have been directed to several examples of what is fairly characterized as seeming over-billing and/or unproductive work, unexplained regular billing in half-hour and full-hour increments that I agree has the appearance of being estimated time docketing rather than actual time spent, billing for administrative time (such as copying and scanning), and notably high hours of work by individual timekeepers in a single day. Although disputed by the respondent, the applicant’s sworn evidence is also that all of the respondent’s accounts were delivered concurrently to him on September 13, 2018 rather than monthly.

[26] The respondent has put forward some evidence explaining the billings and why the issues raised by the applicant are more properly determined at the assessment. I agree that it is not for me to decide them. The respondent’s explanations may well be accepted by the assessment officer and the respondent may well be able to justify the time spent in the context of the work actually performed. However, on balance, I find that merits is a factor weighing in favour of the applicant for the purposes of this motion.

[27] This is also not a situation where the respondent was not paid its fees. It is undisputed that the respondent’s accounts have been predominantly paid in full, other than a modest amount. The respondent acknowledges that the applicant paid over $100,000 for the respondent’s legal services in the underlying custody dispute. Given the protective nature of the Solicitors Act and a seemingly meritorious basis for the applicant to challenge the respondent’s accounts, I find it unfair to require the applicant to post additional funds as security to pursue his statutory right to have his lawyer’s accounts assessed.

[28] The respondent also asks that I consider various proceedings commenced by the applicant in other jurisdictions involving scandalous and vexatious allegations about the judges who were involved in deciding the underlying custody dispute, among others. I give no effect to this argument. Those other proceedings are, in my view, immaterial to whether security for costs should be granted in this case. I agree with the applicant that security for costs is not properly used as a mechanism to sanction a party’s conduct, particularly conduct outside of the proceeding in which the motion is brought. The record before me does not support a finding of any misconduct by the applicant in the course of this assessment proceeding.

[29] Viewing the circumstances of this case holistically, I find that an order for security for costs is not just. I am accordingly dismissing the respondent’s motion.

[30] The parties’ costs outlines reflect costs of this motion within $100 of each other. The parties accordingly agreed that the unsuccessful party should pay the other party’s partial indemnity costs per their costs outline.

[31] For the foregoing reasons, the respondent’s motion is dismissed. The respondent shall pay the applicant his costs of this motion fixed in the amount of $6,752.88, including HST, payable within thirty (30) days. Order accordingly.

ASSOCIATE JUSTICE TODD ROBINSON DATE: October 3, 2023