Court of Appeal for Ontario
Date: 2019-05-16 Docket: C66054
Judges: Hoy A.C.J.O., Lauwers and Zarnett JJ.A.
Parties
First Action
Between
Patrick Whitty, RPR Environmental Inc., 1049585 Ontario Inc., and 876947 Ontario Limited
Plaintiffs (Appellant)
and
Edward N. Wells, Edward G. Wells, Bradley May, Renzo Benocci, Mark Vanderlaan, Manon Bombardier, Gordon Owen, and Attorney General of Canada
Defendants (Respondents)
Second Action
And Between
Patrick Whitty, RPR Environmental Inc., 1049585 Ontario Inc. o/a RPR Environmental Services, and 876947 Ontario Limited
Plaintiffs (Appellant)
and
Edward Nicholas Wells, Edward Glenn Wells, Diana Ball, Luke Cayley, Rob Fortin, Erin Gilmer, Jeffrey Green, Melanie Gregorich, Julie Horvath, Rebecca Huehn, Doug Laing, Bradley May, John Miller, Amrick Shergill, Mark Vanderlaan, Sandra Antoniani, and Attorney General of Canada
Defendants (Respondents)
Counsel
For the Appellant: Vilko Zbogar and Ray Di Gregorio
For the Respondents: Jacqueline Dais-Visca
Hearing and Appeal
Heard: May 7, 2019
On appeal from: The orders of Justice Frederick L. Myers of the Superior Court of Justice, dated September 21, 2018, with reasons reported at 2018 ONSC 5572, and from the costs orders, dated October 10, 2018, with reasons reported at 2018 ONSC 6012.
Reasons for Decision
Background
[1] The appellant, Patrick Whitty, is a plaintiff in two actions against the Attorney General of Canada and individuals employed by Environment Canada. He is also a director and officer of the corporate plaintiffs in those actions and two related actions. The four actions are being case managed together by the motion judge.
[2] The appellant appeals from the dismissal of his personal claims by the motion judge. That dismissal arose in the following way.
Security for Costs Order
[3] In April 2016, the appellant and the corporate plaintiffs moved in all four actions for an extension of time to deliver their affidavits of documents and an expert report. The respondents sought, as a term of the extension, an order for security for costs. On April 4, 2016, the motion judge granted the extension but ordered the appellant and the corporate plaintiffs in the four actions to pay $230,000 in security for costs, on a joint and several basis, in two instalments. The first instalment of $100,000 was paid on May 30, 2016. The appellant personally funded $50,000 of that payment. The second instalment of $130,000 was to be paid on July 1, 2018.
[4] Prior to the due date for the second instalment, the appellant and the corporate plaintiffs obtained leave from the motion judge to bring a motion to vary the security for costs order, which they did. The respondents moved to have all four actions dismissed on the basis of the failure to pay the second instalment and alleged breaches of other court orders. The motions were heard on September 18, 2018.
[5] The security for costs order was in default on September 18, 2018, as the second instalment had not been paid, but it was subject to the motion to vary. The motion judge did not find that the appellant had breached any other court orders.
Motion Judge's Decision
[6] The motion judge refused to vary the amount of security for costs. He was not prepared, however, to dismiss the action of the corporate plaintiffs and instead granted an extension of time, until October 31, 2018, for them to post the second instalment of $130,000 as security for costs. However, he granted no such extension to the appellant, and dismissed the appellant's claims in the two actions in which the appellant was a plaintiff.
[7] The motion judge articulated why he dismissed the appellant's claims in para. 22 of his reasons, which read as follows:
The security for costs orders impose joint and several liability on Mr. Whitty and the corporate plaintiffs. I have emphasized above the invitation in my endorsement for the plaintiffs to decline to post security if they do not wish to invest the funds and effort required to bring this significant matter to trial. In my view, Mr. Whitty has indicated that he is no longer interested in being a personal plaintiff by expressly declining to post further security despite his joint and several liability. This is consistent with the fact that Mr. Whitty has no damages independent of the companies except, possibly, general damages for defamation. Those damages would be trifling compared to the costs of proceeding. Mr. Whitty has made his personal position clear and I respect his choice. The two actions commenced by him are therefore dismissed.
[8] As for the corporate plaintiffs, the motion judge, in deciding to grant them an extension, struck a balance between the principle that compliance with procedural orders is an important goal and the principle that the risk of unjustly depriving a plaintiff of a fair and just resolution of a claim on the merits, due to the effect of security for costs, is to be avoided. He concluded, in respect of the corporate plaintiffs, that it would be just to give them "one last clear opportunity to determine their own fate" by extending the time for the posting of the outstanding instalment of $130,000.
[9] It is common ground that the sum of $130,000 was posted in accordance with that extension.
Standard of Review
[10] The order of the motion judge was a discretionary one. Rule 56.06 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, provides that an action may be dismissed for failure to post security for costs as ordered. Accordingly, the decision of the motion judge is to be afforded deference. Discretionary decisions will not be interfered with unless the court misdirected itself, came to a decision so clearly wrong that it amounts to an injustice, or gave insufficient weight to relevant considerations: Penner v. Niagara (Regional Police Services Board), 2013 SCC 19, [2013] 2 S.C.R. 125, at para. 27. An exercise of discretion on a procedural matter will only be set aside if the court committed a palpable and overriding error of fact or based its decision on an erroneous legal principle: Margaret Grace Kerr v. CIBC World Markets et al., 2013 ONSC 7685, 316 O.A.C. 192, at para. 39; 1196158 Ontario Inc. v. 6274013 Canada Ltd., 2012 ONCA 544, 112 O.R. (3d) 67, at para. 16.
Court of Appeal's Analysis
[11] In our view, in the circumstances of this case, the motion judge's exercise of discretion to dismiss the appellant's action was a reversible error. It was common ground before us that since the order for security for costs imposed an obligation on the appellant and the corporate plaintiffs that was joint and several, one consequence of that was that compliance with the order by any party would satisfy it for all. The motion judge gave insufficient weight to that fact, and erred in principle in reaching his conclusions.
[12] The motion judge ought to have, but did not, engage in the balancing exercise in respect of the appellant that he did when he considered the corporate plaintiffs. The principles and factors he pointed to when he considered the corporate plaintiffs were equally applicable to the appellant, and there is no principled basis upon which the discretion ought to have been exercised in one way for the corporate plaintiffs and in a different direction for the appellant, especially given the joint and several nature of the obligation to which all were subject.
[13] The motion judge inferred that the appellant was no longer interested in being a personal plaintiff because he was expressly declining to post further security, and because of the amount of his damages claim compared to the cost of pursuing it. With respect, that factual inference was not available to the motion judge on the record and in light of the nature of the security for costs obligation.
[14] The motion judge relied on a statement in an affidavit made by a consultant to the plaintiffs quoting the appellant's words that "if it is necessary to pay further security for costs, that cash will need to be found in the business and will not be paid by [the appellant] personally." Read in context, that statement did not amount to "an express declining" to post further security. The motion judge accepted that the appellant was the owner of the corporate plaintiffs, so the desire to find funds in the business to pay security, where such a payment would satisfy the obligations of all parties including the appellant, is not an unequivocal refusal by the appellant to see the security for costs order to which he was subject satisfied. Additionally, although the motion judge made reference elsewhere in his reasons to a second affidavit from the same consultant, which set out a proposal whereby all of the plaintiffs would pay the second instalment of the security for costs ($130,000) on a revised timetable, he did not relate this evidence to the inference he drew about the appellant's continued participation. This evidence is not consistent with a conclusion that the appellant would not comply with a security for costs order. In short, the evidence does not support an inference that the appellant's approach to security for costs showed that he did not want to pursue his claim.
[15] The motion judge's statement concerning the amount of the appellant's likely damages also could not lead to an inference that he had chosen not to pursue his claim. The appellant was one of the parties moving to vary the security for costs order so that the actions could proceed, and he was opposing the respondents' request to dismiss the actions, including his personal claims. He had already funded $50,000 of the first instalment of security. He had given no indication that he was making the choice not to proceed with his actions because of the amount of his likely damages.
Disposition
[16] Accordingly, we allow the appeal and: (a) vary the two September 21, 2018 orders of the motion judge to include the appellant as one of the parties granted an extension of time, until 4:00 p.m. EST October 31, 2018, to post the outstanding instalment of security for costs of $130,000; (b) set aside those paragraphs of the orders that dismissed the appellant's personal claims.
[17] We would not interfere with the motion judge's costs orders in the motions below. Those decisions reflected the fact that although the respondents had not succeeded in obtaining a complete dismissal of the actions, the corporate plaintiffs and the appellant were seeking an indulgence from the court because they had not complied with an existing security for costs order and, until it was extended, were in default of it. Even with the variation we have ordered, those same considerations entail the same costs result.
[18] We award costs of the appeal to the appellant in the sum of $24,000 inclusive of disbursements and applicable taxes, as agreed by the parties.
"Alexandra Hoy A.C.J.O."
"P. Lauwers J.A."
"B. Zarnett J.A."
