SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: CV-11-422050
MOTION HEARD: March 9, 2012

RE: Evolution de Future of Carnival Inc. v. Toronto Mas Band Association and Festival Management Committee

BEFORE: MASTER R.A. MUIR

COUNSEL:
Nafisah Chowdhury for the moving party/respondent Toronto Mas Band Association

Kevin S. Klayman for the responding party/applicant

REASONS FOR DECISION

[ 1 ] The respondent Toronto Mas Band Association (“TMBA”) seeks an order requiring the applicant to post security for costs pursuant to Rule 56.01(1). The applicant opposes. The respondent Festival Management Committee takes no position.

[ 2 ] TMBA is a without share capital corporation responsible for, among other things, acting as the gatekeeper for bands wishing to participate in Toronto’s annual Scotiabank Caribbean Carnival parade and competition (the “Parade”).

[ 3 ] The applicant was incorporated on February 15, 2011. On March 11, 2011 it issued a notice of application seeking a declaration for:

(a) an order allowing it to fully participate in future Parades;

(b) an order reinstating it as a member of TMBA; and,

(c) an order allowing it to change its name to Tribe Toronto.

[ 4 ] The main principal of the applicant is Andre DeFreitas (“DeFreitas”). In addition to DeFreitas, the applicant appears to have two other officers and directors.

[ 5 ] DeFreitas is a member of TMBA whose membership was suspended in 2010. He was involved with TMBA through a band called Evolution Carnival a.k.a. All Spice. At some point in late 2009 or early 2010, DeFreitas sought to have the name of this band changed to Tribe Toronto. At the same time he began promoting Tribe Toronto’s participation in the 2010 Parade. This was a concern to TMBA as Tribe is the name of a masquerade band in Trinidad and Tobago. TMBA receives government funding. As a result it has a policy requiring that all bands in the Parade be entirely Canadian and not be affiliated with any non-Canadian bands. Consequently, TMBA subsequently suspended DeFreitas’ membership. He thereafter incorporated the applicant and brought this application.

[ 6 ] This application is currently scheduled to be heard on April 13, 2012, but the parties have agreed to adjourn the application in order to respond to any order that may be made as a result of this motion.

[ 7 ] DeFreitas was cross-examined on September 18, 2011. During the course of that cross-examination he admitted that the applicant has no assets. TMBA’s lawyer then wrote to the applicant’s lawyer on October 5, 2011 and advised that this motion would be brought.

[ 8 ] TMBA seeks an order requiring the applicant to post security for costs pursuant to Rule 56.01(1)(d), 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, . . .

(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.

[ 9 ] The analysis the court is to engage in when determining a motion for security for costs is summarized in Websports Technologies Inc. v. Cryptologic Inc ., [2003] O.J. No. 5455 (S.C.J. – Master) . At paragraphs 6 and 7 of that decision Master Haberman makes the following observations which I find to be applicable to this motion:

6 The law in this area is fairly clear. Both counsel agree that the court is required to follow a 2-step process when dealing with a Rule 56.01 motion. The initial onus is on the moving party, to demonstrate that the responding party appears to fit within one of the subrules of 56.01(1) (see Hallum v. Canadian Memorial Chiropractic College (1978), 1989 4354 (ON SC) , 70 O.R. (2d) 119 ). The moving party is not required to go so far as to prove that the situation, in fact, meets the criteria of the subsection. They need only demonstrate that there is good reason to believe that that is the case ( see Warren Industrial Feldspar C. Ltd. V. Union Carbide Canada Ltd. et al. , 1986 2683 (ON SC) , [1986] O.J. No. 2364 ).

7 If that is accomplished, the onus shifts to the responding party. They can either demonstrate that they are impecunious and then ask the court to make such order as is just in the circumstances or prove that they do have sufficient assets to respond to a cost order. It is agreed that that onus only arises after the moving party has satisfied the first part of the test.

[ 10 ] Ultimately, it is the role of the court on a motion such as this to make the order that is just in the circumstances. See Hallum at page 123.

[ 11 ] Having applied the analysis set out above, I have come to the conclusion that security for costs should be ordered pursuant to Rule 56.01(1). At the first stage of the analysis under Rule 56.01(1), the onus is on TMBA to demonstrate that it appears that one or more of the factors under Rule 56.01(1) have been established. I am satisfied that TMBA has met this onus under Rule 56.01(1)(d). The applicant is a corporation and it has admitted that is has no assets. Indeed, it appears to have been incorporated solely for the purpose of this application. I am therefore satisfied that TMBA has met the onus of demonstrating that it appears that at least one of the factors under Rule 56.01(1) exists.

[ 12 ] As a result of my finding that TMBA has satisfied Rule 56.01(1)(d), the analysis now moves to the second stage, an assessment by the court of what order is just in the circumstances of this case. At this stage of the analysis, the onus shifts to the applicant to demonstrate why an order for security for costs should not be made. See Websports Technologies at paragraph 7.

[ 13 ] The applicant argues that security for costs should not be ordered because TMBA has not provided sufficient evidence to demonstrate that the application is without merit or that the principals of the applicant have the financial resources necessary to respond to an order for security for costs. In my view, this argument cannot succeed. At this stage of the analysis the onus is on the applicant to present this evidence. It must demonstrate that it is impecunious and that its principals do not have the financial ability to respond to a security for costs order. See Cigar500.com Inc. v. Ashton Distributors Inc. , 2009 46451 (ON SC) , [2009] O.J. No. 3680 (S.C.J.) at paragraph 20 . The applicant has done none of this. In fact, it has filed no responding evidence whatsoever.

[ 14 ] I agree that the merits are usually relevant on a motion for security for costs as the court is required to make such order as is just. However, where impecuniosity has not been shown, the responding party must satisfy the court that its claim has a good chance of success. See Zeitoun v. Economical Insurance Group , 2008 20996 (ON SCDC) , [2008] O.J. No. 1771 (Div. Ct.) at paragraphs 49 and 50 ; affirmed, [2009] ONCA 415 (C.A.). The burden on an applicant who is not impecunious is a high one. See Cigar500.com at paragraph 69.

[ 15 ] Again, the applicant has not satisfied this requirement. It has filed no evidence in response to this motion. It is obliged to put forward some evidence in support of its claim. See Smith Bus Lines Ltd. v. Bank of Montreal , 1987 4190 (ON SC) , [1987] O.J. No. 1197 (H.C.) at paragraph 42 .

[ 16 ] I have therefore concluded that it is just in the circumstances of this application that an order for security for costs be made. I have reviewed the draft bill of costs proposed by TMBA. TMBA requests security for costs on a partial indemnity basis in the amount of $18,271.62, payable within 30 days. This includes approximately 48 hours spent in reviewing the application record and preparing a responding record, along with conducting legal research. It also includes 11 hours for preparation for and attendance at cross-examinations. Finally it includes an estimated 21 hours for preparation for and attendance at the hearing of the application. The applicant’s supporting affidavit is apparently between 20 and 30 pages in length. The cross-examinations of both sides took up one full day. The security for costs requested is based on partial indemnity rates of $225.00 per hour for lawyers called to the bar in 2005 and 2008. In my view, the time and fees set out in the draft bill of costs are reasonable in the circumstances. I do agree with the applicant, however, that it is not reasonable to expect it to post the full amount within 30 days. In my view, payment of the security in stages is just in the circumstances.

[ 17 ] I am therefore ordering that the applicant post security for TMBA’s costs of this application in the amount of $18,271.62. The sum of $8,000.00 shall be posted by May 31, 2012. The further sum of $10,271.62 shall be posted by the applicant 30 days prior to the hearing of the application. These amounts shall be payable in cash or by way of an irrevocable stand-by letter of credit from a Canadian chartered bank, in a form approved by TMBA or the court.

[ 18 ] TMBA has been completely successful on this motion and is entitled to its costs. Neither party had a costs outline available for the court. TMBA submitted that a partial indemnity costs award of $3,300.00 would be appropriate. The applicant suggested $1,200.00 was more reasonable. In my view, the amount suggested by the applicant is fair and reasonable in the circumstances. This was a simple and straightforward motion and no responding material was filed. I am therefore ordering that the applicant pay TMBA’s costs of this motion on a partial indemnity basis, fixed in the amount of $1,200.00 inclusive of HST and disbursements, payable by May 31, 2012.

Master R.A. Muir

DATE: March 9, 2012