Court File and Parties

Court of Appeal for Ontario Date: 20231128 Docket: M54608 (COA-23-CV-0750)

Between: Bank of Nevis International Limited Plaintiff (Appellant/Responding Party)

And: Mark Kucher and BNI Holdcorp Ltd. Defendants (Respondents/Moving Parties)

Before: Trotter J.A. (Motions Judge)

Counsel: Nathan Shaheen and Mehak Kawatra for the moving parties James Hardy and Rebekah O’Hare, for the responding party

Heard: November 9, 2023 by video conference

Endorsement

[1] The respondents in this appeal move for security for costs under rr. 56.01 and 61.06(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. They request an order that the appellant pay into court security for costs for the appeal in the amount of $25,000, and for the underlying motion in the amount of $50,000.

[2] The appellant, a Nevisian bank which has no connections to Canada, commenced an action against the respondents in defamation, breach of a confidentiality agreement, and related causes of action.

[3] All shares in the appellant bank are held by Petrodel Investment Advisers (Nevis) Ltd. (“PIAN”). PIAN is owned by Michael Prest, the former CEO of the appellant. The respondent, Mark Kucher, submits that Mr. Prest is the operating and controlling mind of the appellant; the appellant disputes this claim.

[4] Mr. Kucher was a former Vice-President of the appellant. Mr. Kucher set up BNI Holdcorp Ltd. (“BNI”) to purchase shares of the appellant from PIAN. The transaction failed, for reasons disputed by the parties. Nonetheless, the funds advanced to PIAN by BNI – USD $2.53 million – have not been returned, nor have the shares been delivered.

[5] The appellant contends that, after the deal fell through, Mr. Kucher made false statements and shared confidential information, both of which harmed the appellant’s business, and resulted in criminal charges (fraudulent conversion and fraudulent conversion by a trustee) being initiated against Mr. Prest by the Director of Public Prosecutions in St. Kitts and Nevis. A warrant has been sent to Interpol for the arrest and extradition of Mr. Prest.

[6] The respondents allege that the appellant’s action was commenced in response to Mr. Kucher’s cooperation with prosecutorial authorities. It is payback. They further submit that Mr. Prest caused the appellant bank to commence the action against them without proper corporate authority, and over the express objection of its board of directors. The appellant disputes these claims and points out that the board of directors has subsequently approved the action.

[7] The respondents brought a motion to dismiss the action on jurisdictional grounds. They relied on a clause in the Investment Agreement that governed the failed share-purchase transaction between PIAN and the respondent BNI. The clause stipulated: “Any disputes arising out of this Investment Agreement will only be heard exclusively in the Courts which exercise jurisdiction in the Federation of St. Kitts and Nevis.” They also asserted that the Canadian courts had no jurisdiction under the doctrine of forum non conveniens. The motion judge, Dineen J., accepted both submissions and dismissed the action. He awarded costs in the amount of $50,000.

[8] The appellant appeals from this decision alleging numerous errors in the motion judge’s decision. The respondents contend that the appeal is completely meritless and seek security for costs in the amounts referred to above. They submit that the appellant has no connection to, nor assets in, this jurisdiction. Further, the respondents contend that Mr. Prest, who faces fraud charges and whose company owns all of the shares in the appellant, is a fugitive from justice.

[9] The appellant offers to post $10,000, acknowledging that it has no assets in Ontario. However, it resists an order in a greater amount. It contends that its appeal has merit. Further, the appellant submits that the respondents’ allegations of fraudulent conduct are unfounded and seeks a punitive costs order.

[10] The test for granting security for costs is set out in rr. 61.06 and 56.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194:

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.

(2) If an appellant fails to comply with an order under subrule (1), a judge of the appellate court on motion may dismiss the appeal. [Emphasis added.]

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;

(b) the plaintiff or applicant has another proceeding for the same relief pending in Ontario or elsewhere;

(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;

(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; or

(f) a statute entitles the defendant or respondent to security for costs. [Emphasis added.]

[11] In terms of methodology, it must first be determined whether the requirements of r. 61.06(1)(a), (b), or (c) are met; if so, the question is whether it is just to order security for costs, considering the circumstances and the interests of justice: Thrive Capital Management Ltd. v. Noble 1324 Queen Inc., 2021 ONCA 474, 156 O.R. (3d) 551, at para. 17; NDrive, Navigation Systems S.A. v. Zhou, 2022 ONCA 39, at paras. 8-11.

[12] In my view, this is an appropriate case to award security for the costs of the appeal and the underlying motion. The appellant acknowledges that it should be required to post some security based on its complete lack of connection to Ontario. In my view, $10,000 is insufficient for this purpose.

[13] Moreover, there is a solid basis to conclude that the appeal is frivolous, and perhaps also vexatious. The appellant contends that the motion judge erred in failing to consider whether the respondents could be meaningfully sued in Nevis. They further submit that he should not have found that the forum selection clause applied as against Mr. Kucher, someone who was not a party to the Investment Agreement.

[14] Both grounds of appeal appear to be without merit, but that will be for the panel who hears the appeal to decide. The motion judge gave thorough reasons for concluding that Nevis is the only appropriate forum to commence this action. It would appear that the appellant wishes to avoid invoking the jurisdiction of the Nevisian courts for fear of not receiving a fair trial in light of the criminal proceedings that are afoot against Mr. Prest. The motion judge concluded that this claim was without foundation.

[15] Relatedly, the appellant’s claim that the motion judge erred in applying the forum selection clause is unconvincing. The motion judge carefully considered and rejected this argument, holding that “there is no meaningful distinction between Mr. Kucher and the corporate defendant which is simply a holding company for his benefit.” He also noted that the appellant’s statement of claim ties them together, asserting that “Mr. Kucher should be held personally liable for any damages against the corporate defendant and that he acted as its principal and agent.”

[16] There is “other good reason” to order security for costs. At the heart of this matter is the disappearance of USD $2.53 million. It is still nowhere to be found. The person at the centre of this scenario, Mr. Prest, has been charged with criminal offences by the Director of Public Prosecutions in St. Kitts and Nevis. He has left Nevis and has given evidence in these proceedings that he has no plans to return. His link to the appellant bank, through PIAN, is central to the criminal charges. These are, of course, merely allegations against Mr. Prest, and they may never be proven. However, this is important context that bears on the risk of the respondents face in being unable to recover the considerable costs already expended in responding to what would appear to be a retributive action commenced by the appellant.

[17] Accordingly, I order security for costs of $25,000 for the appeal, an amount that appears reasonable in all of the circumstances, including the nature of the appeal. Moreover, although security for the costs of an underlying proceeding is not ordered “routinely” (see Tsai v. Dugal, 2021 ONCA 170, at para. 15), the same factors identified in the preceding paragraph convince me that the order is justified in this case. The appellants will pay security for costs in the amount of $50,000, equal to the costs order of the motion judge. I note that this costs order was considerably less than the funds expended in defending this action and bringing it to an end before the motion judge.

[18] Balancing all factors, I direct the appellant to post security for costs for the appeal in the amount of $25,000, and for the underlying motion in the amount of $50,000, within 30 days of the release of these reasons.

[19] The respondents are entitled to their costs of this motion in the amount of $7,500, inclusive of disbursements and HST.

“Gary Trotter J.A.”