COURT FILE NO.: 12-53760

DATE HEARD: August 28, 2012

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Asphalt Plant Supply Inc. and Aecon Construction and Materials Limited et al

BEFORE: MASTER PIERRE E. ROGER

COUNSEL: Ian McBride for the plaintiff/responding party

Eric Appotive for the defendants/moving parties

REASONS FOR DECISION

[1] The Defendants bring this motion seeking security for costs. Leave is required under ss. 67(2) of the Construction Lien Act, R.S.O. 1990, c. C-30.

[2] The Plaintiff is an American corporation with its offices in New York State and no assets in Ontario.

[3] The parties are involved in a contractual dispute over amounts owing on a plant relocation contract. The contract was initially for $170,000.00. The Defendants have paid $144,000.00 and allege that the Plaintiff has not been on site since mid-December 2011 with significant amount of work left to be completed. The Plaintiff argues that the work was delayed and made more complicated by the Defendants who agreed to pay for extras.

[4] On July 9, 2012, on consent of the parties, an order was made for a reference to a master to determine all questions arising in the action and on the reference. A first conference before the master, acting as referee, is currently scheduled for October 15, 2012. It would have been preferable, once a reference had been ordered, for this motion to be addressed on October 15. This was not raised by either party at the hearing of this motion however I note that rule 54.05 of the Rules of Civil Procedure permits the hearing of this motion in the absence of or with the consent of the referee, both of which are applicable. I will therefore decide this motion but in the future suggest that motions on a reference should be made to the referee as provided at rule 54.

[5] Considering the evidence presented on this motion and what would be necessary in this case in the interest of doing procedural justice to both parties, I am satisfied that leave to bring this motion should be given. In the circumstances of this case, procedural fairness to the parties requires this motion to be heard as a necessary step (see Melco Construction Inc. v. Jack Frost Sparking Springs Co., 2011 ONSC 2197 and 2016637 Ontario Inc. v. Catan Canada Inc., 2012 ONSC 2055).

[6] The Plaintiff admits that it has no assets in Ontario. The onus therefore shifts (under rule 56.01 (1) (d) of the Rules of Civil Procedure) to the Plaintiff to show either that it has sufficient assets to pay a costs award, or that it is impecunious and that injustice would result by not allowing the Plaintiff to proceed with the action. The court has a broad discretion in making orders that are just in the circumstances and may consider factors including the merits of the claim, the financial circumstances of the plaintiff including assets in a reciprocating jurisdiction and the possible effect of an order preventing a bona fide claim from proceeding (see Uribe v. Sanchez, (2006) 33 C.P.C. (6th) 94).

[7] The Plaintiff has filed evidence that New York is a reciprocating state and that it has assets in New York State. However, I am not satisfied that the evidence of the Plaintiff on this point is sufficient to establish that it has assets in a reciprocating state that could satisfy an adverse costs order. The affidavit filed by the president of the Plaintiff does not provide sufficient information about the assets allegedly available to establish that these could be available to satisfy a costs award. The evidence on that point is limited to a bald assertion. Similarly, the financial statements, attached through a legal assistant, are not sufficient to take the evidence on this point out of the bald assertion category.

[8] The Plaintiff has filed evidence that it cannot pay the security for costs amount sought by the Defendants. However, the Plaintiff has not established that it is impecunious, that it could not pay a reduced amount or that it could not proceed with the action if it was ordered to pay another (smaller or reasonable) amount as security for costs. All it has said is "we are unable to pay the amount that has been requested by the Defendants for security for costs." There is insufficient evidence before this court that the Plaintiff's action will not be able to proceed if the Plaintiff is ordered to pay some other amount as security for costs. To the contrary, it appears implicit, in the way the Plaintiff's affidavit is drafted, that a partial indemnity amount of $16,650.00 might be a possibility as the affidavit suggests it as a more reasonable estimate of anticipated legal fees and does not state that the Plaintiff could not pay that amount if ordered.

[9] The evidence of the Plaintiff is not sufficient to establish that it is impecunious or that it could not continue with this action if it was ordered to pay some reasonable amount as security for costs. The president of the Plaintiff states that he is 78 years old and cannot raise that amount (referring to the full indemnity amount described by the Defendants in their materials) but provides no supporting document or evidence. He provides no evidence of who the shareholders are and whether any might have access to such funds. He provides no banking or financing information. As indicated, the evidence on this is limited to bald assertions that are not sufficient for the Plaintiff to meet its onus.

[10] Consequently, in the circumstances of this case, on the issue of entitlement, I find that security for costs should be paid into court by the Plaintiff.

[11] However, subject to the one payment ordered herein, I leave the issue of the quantum and of any schedule of payment of security for costs to be decided by the referee. Considering the contradictory positions of the parties on required steps, this court cannot predict what reasonable amounts will or not be sufficient. The required procedural steps will be decided by the referee who will then be in a much better position to assess quantum.

[12] Nonetheless, one payment should be made by the first conference and I hereby order the Plaintiff to pay into court by October 15, 2012, as a partial payment of security for costs, the amount of $5,000.00 with the issue of any additional amount and of any required schedule of payment to be decided by the referee.

[13] Costs of this motion should follow the result on a partial indemnity basis reduced slightly for the fact that this motion could likely have been more effectively argued before the referee. Costs of this motion are hereby assessed in the all inclusive amount of $3,000.00, payable by the Plaintiff to the Defendants within the next 30 days.

Master Pierre E. Roger

Date: September 4, 2012