Court File and Parties

BRACEBRIDGE COURT FILE NO.: CV-07-0105-OT

DATE: 20140407

CORRECTED: 20140827

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

1530495 ONTARIO INC.

Applicant

– and –

JORDAN BIONDA also known as JORDI BIONDA also known as JORDY BIONDA and MARCIA MACKESY also known as MARCIE MACKESY

Respondents

Leora Wise, for the Applicant

Richard J. Worsfold for the Respondent Marcia Mackesy also known as Marcie Mackesy

HEARD: April 1, 2014

REASONS FOR DECISION

THE TEXT OF THE ORIGINAL JUDGEMENT WAS CORRECTED ON

AUGUST 27, 2014 AND THE DESCRIPTION OF THE CORRECTION IS APPENDED.

DiTOMASO J.

NATURE OF THE PROCEEDINGS

[1] Three motions were before the court on April 1, 2014 all returnable on a Long Motions day:

(a) the Applicant Corporation’s motion seeking directions under rule 60.17 for an order permitting the set-off of costs awards as between the numbered company and the Respondent Marcia Mackesy (“Ms. Mackesy”);

(b) Ms. Mackesy’s motion seeking to set aside the judgment of Wood J. dated September 24, 2007 and other relief sought; and,

(c) The Applicant numbered company’s motion to stay the motion of Ms. Mackesy for failure to pay costs ordered against her.

[2] Counsel for Ms. Mackesy submitted that the court hear all three motions on April 1, 2014. Counsel for the numbered company submitted that the stay motion, which also included a request for security for costs, be heard prior to the motion to set aside judgment and the rule 60.17 motion for set-off.

[3] Having heard the argument of counsel, the preferred course of proceeding was to deal with the stay/security for costs motion first and thereafter, proceed to deal with the other two motions. I reserved my decision in respect of the stay/security for costs motion with reasons to follow. These are my reasons.

OVERVIEW

[4] There are two actions involving the same or related parties. The Toronto action is set down for trial in February of 2016. It relates to allegations of fraud amounting to some two million dollars against the Respondents by the Applicant and its principals Elio Miotto and David Miotto regarding their investment in what amounted to an alleged Ponzi scheme.

[5] The Bracebridge action which involves these three motions related to the possession of property known as 255 Allison’s Point Road in Huntsville, Ontario.

[6] By judgments dated June 11, 2007 and September 24, 2007 both by Wood J., the Applicant as landlord obtained possession of the Allison Point Road residential premises occupied by Jordan Bionda and Ms. Mackesy as well as judgment for $182,456.87 plus costs in the amount of $31,913.78.[^1] The judgments remain outstanding and have never been appealed by Ms. Mackesy.

[7] The history of this application is relevant as follows:

• The Applicant brought an application for an order to terminate the tenancy of the Respondents, to evict the Respondents and for mental and property tax arrears regarding the Allison Point property.

• April 30, 2007 – Motion not heard

• May 8, 2007 – Ms. Mackesy requested an adjournment to retain counsel. $1,000 costs were awarded against her by Wood J.

• May 29, 2007 – matter not reached.

• June 7, 2007 – Ms. Mackesy advised that she would attend cross-examination if properly served.

• June 11, 2007 – Ms. Mackesy pleadings were struck by Wood J. for a failure to pay the order of Justice Sosna dated May 8, 2007 for the $1,000 costs awarded against her. Justice Wood found that the Respondents were tenants in respect of the Allison Point property. A Writ of Possession was ordered to issue.

• Jordan Bionda appealed this judgment, which appeal was dismissed. Justice LaForme of the Court of Appeal in his reasons of August 18, 2007 did not disturb the findings of Wood J. in that a tenancy existed where Jordan Bionda and Ms. Mackesy were tenants and that tenancy was terminated.

[8] On September 24, 2007, the Application was returned before Wood J. The Affidavits and Pleadings of Jordan Bionda were struck (the pleadings of Ms. Mackesy having been struck on June 11, 2007 by Wood J.). By his endorsement of September 24, 2007 Wood J. proceeded in respect of a motion for judgment on affidavit material as against both Jordan Bionda and Ms. Mackesy, on the basis that both their pleadings had been struck. The matter proceeded by way of undefended trial. Wood J. awarded judgment to the Applicant in the amount of $182,456.87 for arrears of rent and compensation, arrears of taxes and prejudgment interest as against both Defendants Jordan Bionda and Ms. Mackesy “jointly and severally” and costs against them in the amount of $31,913.78.

[9] In addition to or failure to pay the $1,000 ordered by Sosna J., Ms. Mackesy also refused to pay two cost orders totalling $3,500. I am advised that she has paid within the last ten days $1,000.

[10] The two cost orders totalling $3,500 (plus interest) and the cost order of $31,913.78 (together with accrued interest) by way of judgment of Wood J. dated September 4, 2007 also remain unpaid. The costs of $3,500 were ordered payable by Ms. Mackesy on June 11, 2007 by Wood J.

[11] The Applicant sought to enforce its judgment in respect of costs by way of its rule 60.17 motion. Ms. Mackesy countered with her motion for an order to set aside judgment. Her motion prompted this motion brought by the applicant for a stay/security for costs order, all of which brings these motions before me.

ISSUES

[12] The issues to be determined are whether the Applicant is entitled to an order staying Ms. Mackesy’s motion to set aside the judgment dated September 24, 2007 and whether the Applicant is entitled to an order for security for costs.

POSITION OF THE PARTIES

Position of the Applicant Numbered Company

[13] The Applicant numbered company submits that cost orders remain unpaid since 2007. While Ms. Mackesy presents herself as impecunious and judgment proof, she is neither. Ms. Mackesy claiming to be impecunious, she is not. She simply chooses not to pay what she owes. She presents herself as judgment proof. She lives in Panama, out of the jurisdiction. She has not appealed any of the cost awards. She has not paid any of the cost awards (save and except for the $1,000 on the eve of the return of these motions). Judgment was obtained against her on September 24, 2007. She has not appealed this judgment. The judgment remains unsatisfied.

[14] Her pleadings were struck because she refused to co-operate. Costs were ordered because of her conduct and not because she had lost a motion brought in good faith. A stay would be the only sanction available against Ms. Mackesy for failure to abide by court orders and judgments.

[15] As for security for costs, Ms. Mackesy presents as judgment proof and will not pay her costs. She is not impecunious and does have sources of funding. She lives in Panama with her children out of the jurisdiction. Although she is not employed, her expenses and living accommodation are paid. She is represented by counsel who do not act for her on a pro bono basis.

[16] Total costs are outstanding in the amount of $49,340.76 (inclusive of accrued interest) to today’s date. Those costs ought to be paid before Ms. Mackesy’s motion to set aside judgment is heard by this court.

[17] In addition, security for costs are sought from Ms. Mackesy in the range of $15,000 to $20,000 payable within the next 30 days. The test for security for costs is met in this case and such an order ought to be granted.

Position of Marcia Mackesy

[18] It is submitted that neither the costs in the amount of $3,500 nor the costs of $31,913.78 (plus interest) are costs payable by Ms. Mackesy. It is submitted that neither amount ought to be paid by her. Rather, those costs awards pertain only to Jordan Bionda.

[19] Insofar as the judgment of Wood J. dated September 24, 2007 is concerned, it is submitted that the order is wrong and the costs award is really part of that judgment which Ms. Mackesy seeks to set aside.

[20] As for the motion for security for costs, while the sum of $15,000 is not an unreasonable number, to award security for costs in these circumstances would not be appropriate.

[21] It is submitted that the Applicant’s motion for a stay/security for costs ought to be dismissed.

[22] In the alternative, it is submitted that if the payment of costs is a pre-condition to the hearing of Ms. Mackesy’s motion to set aside the judgment, then only the sum of $3,500 plus interest ought to be paid.

ANALYSIS

Motion for Stay to Set Aside Judgment of Wood J. dated September 24, 2007

[23] I disagree with counsel for Ms. Mackesy that the outstanding cost orders relate only to Mr. Bionda and not Ms. Mackesy. The judgment of Justice Wood dated June 11, 2007 can be found in the Applicant’s Responding Motion Record to Ms. Mackesy’s Motion to set aside order at page 53 (see Tab 2 Exhibit J). By that order, the Respondents (plural) were ordered to pay the Applicant’s costs fixed in the amount of $3,500 payable within 30 days. I reject the argument of Ms. Mackesy’s counsel that the order should be interpreted to read the costs were payable only by Mr. Bionda. The order is also supported by the Reasons for Decision of Justice Wood found at page 63, the judgment found at page 65, his endorsement found at page 70 and his Reasons for Decision dated June 14, 2007 found at page 73.

[24] I also reject the submission made on behalf of Ms. Mackesy that the costs ordered by Wood J. on September 24, 2007 in the amount of $31,913.78 again is only payable by Mr. Bionda and not Mr. Bionda and Ms. Mackesy. At paragraph 3 of the judgment found at page 82, the court ordered that the Respondents (plural) shall pay to the Applicant its costs on a substantial indemnity basis fixed in the amount of $31,913.78. The endorsement of Wood J. dated September 24, 2007 can be found at page 84. Both Mr. Bionda and Ms. Mackesy were “jointly and severally” responsible for the judgment. The Plaintiff was entitled to costs on a substantial indemnity basis as set out at page 86.

[25] Accordingly, Ms. Mackesy owes the Applicant the following outstanding costs with interest at six percent:

(a) On $3,500 from June 11, 2007 to today’s date – interest of $1,430.77 for a sub-total of $4,930.77

(b) On $31,913.78 from September 24, 2007 to today’s date with interest of $12,496.21 for a subtotal of $44,409.99

Grand total is $49,340.76.

[26] These costs remain unpaid since 2007. I find that Ms. Mackesy is not impecunious but rather she chooses not to pay these costs. She did not appeal the costs awards. She has not appealed the judgment of September 24, 2007. This judgment and the costs remain unsatisfied. She presents as judgment proof and she lives in Panama.

[27] I find that Ms. Mackesy should not be allowed to proceed with her motion to set aside the judgment in circumstances where she has failed to pay costs.

[28] The court may stay the party’s proceeding, strike out the party’s defence or make such order as is just pursuant to rule 57.03(2) of the Rules of Civil Procedure.

[29] Further, where a party fails to comply with an interlocutory order, the court may in addition to any other sanction provided by the Rules of Civil Procedure may stay a party’s proceeding, dismiss the party’s proceeding, or strike out the party’s defence; or, make such an order as is just. See the Rules of Civil Procedure rule 60.12.

[30] In Burrell v. Peel (Regional Municipality) Police Services Board (2008), 66 C.P.C. (6th) 223, 2008 CarswellOnt. 8173 (SCJ) Master Dash considered the impecuniosity of a party and therefore inability to pay a cost award. In Burrell impecuniosity was found not to be a valid excuse to disobey a court order. The action was stayed where the Plaintiff failed to pay costs ordered by the court. Burrell supra at paras. 30, 37, 39, 40, 55, 63 and 67.

[31] The cost awards have been outstanding since 2007. The cost award of $1,000 was only paid ten days ago. It is Ms. Mackesy’s behaviour that led to cost awards in the first place and, ultimately, in the striking of her pleadings. As for any claim of impecuniosity on her part, even if valid which I doubt, this does not excuse her from disobeying a court order. Ms. Mackesy’s pleadings were struck precisely for the reason of failing to pay costs. Her conduct also demonstrated that she refused to co-operate in addition to refusing to pay costs. She failed to retain other counsel after obtaining an adjournment to do so. She refused on two separate occasions to submit to cross-examination. She had deliberately delayed the proceedings and by doing so showed a lack of co-operation.

[32] Ms. Mackesy’s position is that the Applicant is not allowed to set off cost orders or judgment in its favour while she is entitled to enforce cost orders in her favour. In all of the circumstances, this position flies in the face of the interests of justice.

[33] I find that if Ms. Mackesy wishes to pursue her motion to set aside judgment, she may be permitted to do so only after she pays within the next 30 days outstanding costs owed to the Applicant in the amount of $49,340.76.

Security for Costs

[34] Rule 61.06(1) provides that in an appeal where it appears that there is good reason to believe that the Appeal is frivolous and vexation and that the Appellant has insufficient assets in Ontario to pay the costs of the appeal, an order for security for costs could be made against the Appellant under rule 56.01.

[35] In accordance with rule 56.01(1)(a), (c), (e) the court may make an order for security for costs on a motion by a Respondent where the moving party is (a) ordinarily resident outside of Ontario, (c) where the Respondent has an order against the moving party for costs in the same or another proceeding that remains unpaid in whole or in part, and (e) where there is good reason believe that the action or application is frivolous and vexatious and the Plaintiff or Applicant has insufficient assets in Ontario to pay the costs of the Defendant or Respondent.

[36] In considering whether there is good reason to believe an appeal is frivolous and vexatious, a court may consider the merits of the appeal, the presence or absence of oblique motives for launching the appeal and the conduct of the parties.[^2]

[37] It is submitted that Ms. Mackesy’s motion to set aside judgment after not appealing same or the cost orders over five years, is an attempt at circumventing the rules of appeals and the rules on security for costs which would preclude her from such opportunity. It is further submitted that the reason for Ms. Mackesy’s attempt to set aside the judgment at this time is because the Applicant has brought a motion for set-off in an attempt to execute against Ms. Mackesy who presents as judgment proof.

[38] Ms. Mackesy has not paid her costs or the judgment. She has acknowledged that she is judgment proof, living in Panama with her children where Jordan Bionda lives and is supported by Jordan and his family members who are also Defendants in the Toronto action. She runs no risk of costs in bringing motions and forcing the Applicant to incur additional costs.

[39] It is submitted by the Applicant that the appropriate procedure to set aside the judgment against Ms. Mackesy would be by way of appeal for which time expired approximately five years ago. Pursuant to rule 1.04(2) and 61.06(1) an order for security for costs should issue by analogy.

[40] The Applicant relies upon the decision in David Bradshaw Holdings Inc. v. Esmail 2009 CarswellOnt. 2907, 78 C.P.C. (6th) 313, 177 A.C.W.S. (3d) 663. In the David Bradshaw case, Turnbull J. was prepared to allow judgment to be set aside and the matter to proceed to trial on terms. (see para. 45) Those terms included the payment by the Defendants to the solicitors for the Plaintiff the amount of the judgment, plus prejudgment interest, security for costs and costs of the motion. The money was to be held in an interest bearing account until final judgment (including any appeals) had been rendered and/or settlement of the action had occurred.

[41] Also cited by counsel for the Applicant was Canadian Imperial Bank of Commerce v. Petten 2010 CarswellOnt 9126, 2010 ONSC 6726, at paras. 8, 10, 11, 12, 13, 24 and 25. In the CIBC case, Corbett J. considered circumstances where a default judgment will not be set aside. Also see Luciano v. Spadafora 2004 CarswellOnt 4307, paras. 2, 7, 13, 17 and 18.

[42] Lastly, the case of Flintoff v. von Anhalt 2010 ONCA 786 was cited by the Applicant in respect of general principles relating to setting aside default judgment.

[43] Counsel for the Applicant submitted that Ms. Mackesy is only bringing her motion to set aside judgment because now she sees value in her judgment regarding cost awards in her favour that she did not see before. She is capitalizing on being judgment proof seeking costs payable to her without paying costs owed to the Applicant. At the same time, she is not exposed to continuing legal expense because she lives out of the jurisdiction and presents as judgment proof. She has not taken steps to set aside the judgment or appeal the judgment or do anything in respect of the judgment (and the same can be said for costs) since 2007. Noteworthy is the fact that Ms. Mackesy is not seeking to set aside a default judgment but rather the judgment of Wood J. which was awarded after an undefended trial on affidavit evidence.

[44] In all the circumstances, I find that Ms. Mackesy ought to pay security for costs. It is just to do so and the Applicant has satisfied its burden that security for costs is appropriate per rule 56.02(1). Counsel for Ms. Mackesy does not disagree that $15,000 is an appropriate number although he submits no amount should be paid. I accept the amount of $15,000 as being an appropriate amount for Ms. Mackesy to pay as security for costs referable to her motion to set aside judgment. She is ordinarily resident in Panama. There are outstanding costs orders against her which costs remain unpaid and she has insufficient assets in Ontario to pay the costs of the Applicant. There is merit in the argument advanced on behalf of the Applicant that there is good reason to believe Ms. Mackesy’s motion to set aside the judgment is frivolous and vexatious. However, the motion to set aside remains outstanding to be dealt with on another day conditional upon Ms. Mackesy paying security for costs in the amount of $15,000. Ms. Mackesy shall post security for costs to the Applicant to the credit of this application with the accountant of the Superior Court of Justice in the amount of $15,000 within 60 days of this order. Further, Ms. Mackesy may not take any step in this proceeding including her motion to set aside judgment of Wood J. dated September 24, 2007, unless and until such security for costs and payment to the Applicant of outstanding costs has been made in accordance with this order.

CONCLUSION

[45] Accordingly, it is hereby ordered:

(a) Marcia Mackesy also known as Marcie Mackesy shall pay to the Applicant outstanding costs in the amount of $49,340.76 within 30 days of this order;

(b) Marcia Mackesy also known as Marcie Mackesy shall post security for costs in respect of the motion to set aside judgment to the credit of this action with the Accountant of the Ontario Superior Court of Justice in the amount of $15,000 payable within 60 days from the date of this order;

(c) Ms. Mackesy may not take any step in this proceeding unless and until such costs and security for costs have been paid in accordance with this order;

(d) if those costs and security for costs are paid in accordance with this order, then Ms. Mackesy and the Applicant may schedule a return of the motion to set aside the judgment and for the set-off of costs per rule 60.17. I am seized of those motions. If those costs and security for costs are unpaid in accordance with this order, then the Applicant may schedule a return of the said motions.

[46] As for the costs of this motion, if the parties cannot agree on those costs, I will determine costs by way of written submissions not to exceed two pages in length from the Applicant within ten days of the release of this decision together with a Costs Outline, Bill of Costs and any Brief of Authorities. Ms. Mackesy’s same materials will follow ten days thereafter. All written submissions are to be delivered to my judicial assistant at Barrie.

DiTOMASO J.

Released: August 27, 2014

CORRECTION

1. The following sentence was added to para. 45(d):

If those costs and security for costs are unpaid in accordance with this order, then the Applicant may schedule a return of the said motions.

[^1]: Applicant’s Responding Motion Record in Mackesy motion to set aside judgment. Affidavit of Elio Miotto sworn July 19, 2012 at Tabs L and P.

[^2]: Schmidt v. Toronto-Dominion Bank, 1995 3502 (ON CA), [1995] O.J. No. 1604 (C.A.) at para. 18