SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: 08-6311
DATE: 2012-02-17

RE: JAMES CORBETT, Plaintiff/Responding Party

AND:

LAWRENCE GAN, Defendant/Moving Party

BEFORE: The Honourable Mr. Justice D. A. Broad

COUNSEL:
Andrew Rudder for Plaintiff/Responding Party
Scott W. Beattie for Defendant/Moving Party

HEARD: February 15, 2012

ENDORSEMENT

[ 1 ] This is a Motion brought by the Defendant for an Order that:

(a) The Plaintiff serve a further and better Affidavit of Documents; and

(b) The Plaintiff provide security for costs.

[ 2 ] The Defendant (Mr. Gan) is the former lawyer for the Plaintiff (Mr. Corbett) in respect of claims, including claims for Statutory Accident Benefits, arising from a motor vehicle accident which occurred on March 10, 2006, in which the Mr. Corbett suffered injuries.

[ 3 ] Mr. Gan was retained by Mr. Corbett from March 14, 2006 to September 10, 2007 when Mr. Corbett terminated the retainer. On the next business day, Mr. Corbett, representing himself, entered into a settlement agreement with the statutory accident benefits insurer. Mr. Corbett alleges in the Statement of Claim that Mr. Gan was negligent in a number of respects, including failing to advise Mr. Corbett of his rights. Pursuant to a reply to Demand for Particulars, this included failing to advise and mediate with respect to “non-earner benefits.”

Affidavit of Documents

[ 4 ] The record shows that Plaintiff’s counsel has made repeated requests on the Plaintiff’s counsel for a full, complete, and particularized Affidavit of Documents and document production. Prior to the argument of the Motion, the Plaintiff provided a second sworn Affidavit of Documents and document production, however, the Plaintiff contends that it remains deficient, in that the documents at Tab 4, being physiotherapy records, are not individually listed and identified.

[ 5 ] On the basis of the principles laid down in the case of Mirra v. Toronto –Dominion Bank , 2002 CarswellOnt 1019 , it appears that the documentary disclosure by the Plaintiff does not meet the standard of particularity and organization to facilitate the orderly and efficient conduct of discovery and trial, as emphasized in Mirra. Counsel for the Plaintiff acknowledged in argument that there is no impediment to the Plaintiff providing that degree of particularity and that it is simply a clerical task to be carried out.

[ 6 ] As indicated in Mirra , there is an interest in requiring parties to make an upfront investment in document disclosure in order to facilitate a more efficient and effective process for determination of the issues in the action on the merits. I therefore order that the Plaintiff provide a further and better Affidavit of Documents indentifying and listing the individual documents comprising Tab 4, being the physiotherapy records, sufficient to enable swift and sure retrieval of the documents on discovery and at trial.

Security for Costs

[ 7 ] The Defendant seeks security for costs from the Plaintiff in the sum of $40,000.00. The Defendant relies upon sub-rule 56.01(1)(a) (the Plaintiff ordinarily resident outside Ontario) in support of its claim for security for costs. The Defendant did not press reliance on sub-rule 56.01(1)(e) (frivolous and vexatious).

[ 8 ] It is common ground that the Plaintiff was resident in Nova Scotia at the time that the action was commenced and remains so.

[ 9 ] The first stage of the enquiry is whether the Plaintiff is ordinarily resident outside of Ontario. As indicated, that is acknowledged in this case. On the basis of the case of Stoyanovic v. Bulut 2011 ONSC 874 (Master) the issue then becomes whether it is just to order security considering all of the relevant circumstances, including, but not necessarily limited to, the plaintiff’s financial situation and merits of the plaintiff’s case [see Stoyanovic para. 69] .

[ 10 ] It is common ground that there is a lower standard for consideration of the merits of the action where impecuniosity has been shown (i.e. that the claim is not clearly devoid of merit) than if impecuniosity has not been shown (i.e. whether the claim has a good chance of success) [see Zeitoun v Economical Insurance Group 2008 20996 (Div Ct) at para. 50] .

[ 11 ] The Stoyanovic case contained a discussion of the distinctions between “impecuniosity” and “financial hardship” in connection with a consideration of whether it would be unjust to order security for costs. Justice Gans observed at paragraph 7 that neither notion is spoken to Rule 56.01, but rather, they form part of the judicial gloss which has attached to the Rule as part of the broad judicial discretion to be exercised. At paragraph 9 Justice Gans observed that the two terms are often referred to synonymously. Regardless of whether the test is one of “impecuniosity” or “financial hardship”, the question relates to the effect that an order for security for costs would have on a plaintiff’s ability to bring an action, which is not devoid of merit, to Court for a decision on the merits.

[ 12 ] As stated by the Divisional Court in Zeitoun [at para. 46] the onus is on the Plaintiff to demonstrate impecuniosity on a balance of probabilities. Although the evidence must be reasonably complete and persuasive, it is not necessary that it achieve the level of proof which would be required in a criminal context. Although obvious and significant gaps in the evidence may militate against a Plaintiff seeking to establish impecuniosity, forensic precision is not required.

[ 13 ] Here the Plaintiff has shown that he is unemployed, is dependent on his mother for basic support, and has no assets of any substance, if at all. The Defendant points out that the Plaintiff has not accounted for the $20,000.00 settlement of his statutory benefits claim in September 7, 2007. However even if it can be assumed that the full amount of the proceeds of that settlement remains intact, the Plaintiff is indebted in the sum of approximately $13,000.00, leaving a net worth of $7,000.00 at most.

[ 14 ] Notwithstanding Mr. Beattie’s capable argument, I am satisfied, based upon the record before me, that the Plaintiff is impecunious, so as to trigger a consideration of the merits of the claim on the lower standard of “not clearly devoid of merit.”

[ 15 ] It appears that the most significant aspect of the Plaintiff’s claim is the allegation that Mr. Gan, as his lawyer, did not advise him adequately, or at all, of the potential to make a claim for “non-earner benefits.” Mr. Beattie, for the Defendant, argues that in order for the Plaintiff to succeed on this claim he will not only have to prove a breach of duty, but also that he would have succeeded in making a claim for non-earner benefits.

[ 16 ] The relevant test for “non-earner benefits” is set forth at section 12(1) para. 1 of O. Reg 403/96 , i.e. that the insured has suffered “a complete inability to carry on a normal life.”

[ 17 ] It appears from the case of Heath v. Economical Mutual Insurance Company 2009 ONCA 391 [at para. 50] that the determination of entitlement to “non-earner benefits” depends upon a comparison of the claimant’s activities and life circumstances before and after the accident.

[ 18 ] The evidence which the Plaintiff has led with respect to his activities and circumstances pre and post-accident, although not complete and exhaustive, suggests that his claim, at this stage of the proceeding cannot be said to be “clearly devoid of merit.” This observation may be subject to change following a more fulsome exploration of the facts and medical evidence following discovery.

[ 19 ] The Court of Appeal in the very recent case of Graham v. Vandersloot , 2012 ONCA 60 has reaffirmed the principle that there is a public interest that, whatever the outcome, a litigant should perceive that he or she had their day in Court. Given the Plaintiff’s financial circumstances, to order security for costs in any substantial amount, in the present circumstances would effectively stop this action, which cannot be said to be “clearly devoid of merit”, in its tracks. I therefore dismiss the motion for security for costs, without prejudice to the Defendant reapplying for security for costs following discovery of the Plaintiff, once a more complete consideration of the merits of the claim may be carried out.

[ 20 ] The parties may make brief written submissions respecting costs within twenty-one days hereof.

BROAD J.

DATE: February 17, 2012