COURT FILE NO.: CV-08-351729
DATE: August 15, 2014
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
PARMA GENERAL CONTRACTORS INC.
R. Lachmansingh and H. Keith Juriansz for the plaintiff
Tel.: 416-226-2342,
Fax: 416-222-6874
Plaintiff
- and -
ROMINA PULCINI, M.J.R. CANADA
ENTERPRISES INC. and THE TORONTO
DOMINION BANK
Joseph C. Vieni, for the defendants, Romina Pulcini and M.J.R. Canada Enterprises
Tel.: 416-221-8181
Fax: 416-221-0303
Defendants
James Diamond, for the defendants in the Joint Venture Action,
Tel.: 416-224-2400;
Fax: 416-224-2408.
HEARD: July 10, 2014.
Master C. Wiebe
COSTS DECISION
[1] On March 27, 2014, I issued my reasons for judgment in this matter. I have subsequently received written submissions on the two remaining issues to be determined. These two issues are the following: the costs to be awarded; and the use to be made of the cash security posted for the Parma claims for lien. At my request, further oral argument took place before me on July 10, 2014.
[2] I now give my ruling on these two remaining issues, and this ruling applies to the above noted action, CV-08-351729 (“Action 29”), and the actions with court file number, CV-08-351735 (“Action 35”) and CV-08-351730 (“Action 30”). It must be filed accordingly.
Costs award
[3] The parties have not changed their originally submitted cost outlines and bill of costs. On January 17, 2014, Mr. Vieni submitted three partial indemnity cost outlines, one in the total sum of $34,225.30 for Action 29, another in the total sum of $30,688.32 for Action 30, and the third in the total sum of $34,225.30 for Action 35. On January 23, 2014 Mr. Lachmansingh submitted a partial indemnity bill of costs for Parma in the total sum of $110,244.24 for all three actions.
[4] On January 10, 2012 Master Polika ordered that costs of the then unsuccessful motion of the Defendants to have the Parma claims for lien declared expired should be paid to the Defendants in the amount of $2,556.68 in the event the Defendants succeeded on that issue at trial. The Defendants have succeeded on this issue at trial. Therefore, they are entitled to the costs Master Polika ordered on January 10, 2012.
[5] As to the other costs of these actions, I note first that my jurisdiction to award costs comes from section 86 of the Construction Lien Act (“CLA”) and from section 131 of the Courts of Justice Act (“CJA”) and Rule 57.01 of the Rules of Civil Procedure by operation of CLA 67(3). CLA section 86 and CJA section 131 and Rule 57.01 have been ruled not to be inconsistent with each other.
[6] The two issues to be considered under CLA section 86 are the following: whether a party or a person knowingly participated in the preservation or perfection of a claim for lien where it was clear that the claim for lien was without foundation, as an award of costs “may” be made against that party or person in that event; whether “the least expensive course” was not taken, as an award of costs cannot exceed the costs that would have been incurred had the least expensive course been taken in that event. None of the parties took a position on the latter of these two issues, and therefore I make no ruling that regard. As to the former of the two tests, the Defendants took the position that costs should be awarded against Parma for having knowingly preserved and perfected a lien that had clearly expired.
[7] As to Rule 57.01, the parties made substantial submissions concerning the factors to be considered in awarding costs pursuant to that rule. I will review these submissions and consider as well the issue of proportionality which is incorporated into this exercise by Rule 1.04(1.1).
(i) Result of the proceeding
[8] Rule 57.01(1) specifies that the result of the proceeding is to be considered in awarding costs. As stated in Orkin, The Law of Costs, 2d Edition, page 2-34.1, as a general rule, “a successful party may expect to receive an award of costs, and as a corollary, should not expect to be ordered to pay the costs of the unsuccessful party.” Therefore, it is vital to determine which party has been “successful.”
[9] In this case, that is not a straight forward exercise. In my Reasons for Judgment, I ruled that MJR is liable to pay Parma certain amounts in each of the actions. The Defendants disclosed the offers to settle that were given to Parma in this case. Each of the amounts I found MJR liable to pay Parma exceeds the amounts of the offers to settle that were given to Parma by the Defendants. I, therefore, rule that Parma was successful in these actions as against MJR.
[10] In my Reasons for Judgment, I also ruled that MJR was a “contractor” for the purposes of the CLA, and not an “owner.” Therefore, the judgment against MJR does not implicate the other Defendants, who are “owners.” I therefore rule that Parma was successful in these actions as against MJR, but only as against MJR.
[11] Mr. Vieni argued that the Defendants, including MJR, were the real successful parties or that I should find that there was divided success as a result of the fact that Parma did not succeed on all of its issues. I am not prepared to find that MJR was successful in light of the result, as noted above. As to a distributive order as to costs based on the results concerning the issues, I agree with Mr. Lachmansingh that such orders are frowned upon by the courts in light of the connection between offers to settle (which are results oriented) and costs; see Oakville Storage and Forwarders Ltd. v. Canadian National Railway (1991), 1991 CanLII 7060 (ON CA), 5 O. R. (3d) 1 (Ont. C.A.) and Skye v. Matthews 1996 CarswellOnt 37 (Ont. C.A.). I do not make a distributive order as to costs.
[12] However, the other Defendants have been entirely successful in defeating the Parma claim as against them. Based on the same logic, the other Defendants would be entitled to an award of costs as against Parma. I will proceed accordingly.
(ii) Indemnity
[13] The accuracy and reasonableness of the amounts claimed in the submitted costs outlines and bill of costs were questioned by neither side. I will not comment on this issue further as a result. I will add though that these documents did not decipher between the costs incurred by or in relation to MJR and by or in relation to the other Defendants. This will be factor in my eventual ruling on costs.
(iii) Reasonable expectations
[14] Both sides conceded that, as the submitted costs outlines of the Defendants on the one hand and bill of costs of Parma on the other were not significantly different, there was no issue that the partial indemnity costs being claimed were beyond the reasonable expectation of the losing party. I will make no comment on this point as a result.
(iv) Complexity and importance of the issues
[15] Both sides maintained that these actions were complex given the joint venture context within which the issues arose. I agree. The existence of the joint venture introduced issues that were well beyond the usual breach of contract issues in a lien action.
[16] Both sides also maintained that the actions were very important to each of them. I agree. For the Defendants, the registration of the Parma claims for lien and the subsequent registration of Remo’s certificates of pending litigation in the Joint Venture Action interrupted the sales of the remaining properties in the Joint Venture. Sale proceeds were tied up in court. Trade and other obligations were unsatisfied. Only some of these resulting issues have been resolved. For Parma, there was a concern that it would not get paid for its work for MJR without these proceedings. The Joint Venture Action itself may also be affected by this ruling.
(v) Conduct of the parties:
[17] Most of the argument focused on the conduct of the parties and the cost consequences that should flow from same. Both CLA section 86(1) and Rule 57.01 require that I consider the conduct of the parties. Orkin, The Law of Costs, states in pages 2-63 to 2-69 that costs can and have been denied successful parties on account of the misconduct of the parties, and can be denied both parties if both are in the wrong.
[18] Having considered the submissions of the parties, I have decided not to award costs to either side as a result, other than as was awarded by Master Polika. My reasons for doing so are outlined as follows.
[19] I have decided to deny Parma a costs award against MJR for the following reasons:
a) In my Reasons for Judgment, I found that Parma and Remo deliberately re-drew the Kuchartz invoice and engaged in other related conduct (such as the payment of the Kuchartz invoice) for the purpose of preserving the Parma lien rights that had expired by that point in time. That they engaged in this course of conduct is proof enough for me that they did this knowing that the Parma lien rights had expired. This is the kind of conduct that is contemplated by CLA section 86(1)(i) and merits significant sanction.
The impact of the registration of the Parma claims for lien was significant. It interrupted the sales of the remaining lands in the Joint Venture with all of the consequences that flowed from that fact. Had Parma not registered its claims for lien, it would have been left with a breach of contract action as against MJR and a breach of trust claim as against MJR and its principals. There would have been no security posted for the Parma claims for lien. There would have been no interlocutory proceedings concerning this security or the Parma lien rights. There would have been no lien reference. The litigation would have been speedier as a result. In fact, given the offers to settle from the Defendants, the cases would probably have been resolved well in advance of trial. That course of action did not suit the purpose of Parma or Remo.
I will not award MJR or the other Defendants costs as a result of this conduct (particularly in light of Parma’s success on the breach of contract claim as against MJR); but I will take the next step of denying the otherwise successful party, Parma, costs as against MJR.
b) There is clear evidence that Parma negligently, if not deliberately, registered exaggerated claims for lien on the Carnarvon properties. The exaggerated amount totaled about $45,000 and pertained to the alleged unpaid work Parma performed on 22 Carnarvon. It was added to the Parma claims for lien on 24 and 26 Carnarvon. 22 Carnarvon had been sold 2 ½ months prior to the registration of the two Parma claims for lien on 24 and 26 Carnarvon. At trial, Daniel showed how the December 31, 2008 Parma invoice concerning Carnarvon was allocated between the three Carnarvon properties. He gave no explanation as to why this accounting work was not done prior the registration of the Parma claims for lien on the Carnarvon properties. As I stated in my Reasons for Judgment, it is hard not to conclude from this that Daniel was as capable as his father of obfuscation and exaggeration to suit his interests. This is further conduct that is contemplated by CLA section 86(1)(i).
c) The bulk of the trial was consumed by the Parma claims in the December 31, 2007 invoices. These were claims for labour that had no backup in time sheets or other contemporaneous documents that trades usually maintain when making claims for compensation for extra labour. Daniel essentially reconstructed the invoices from the witness stand. Furthermore, there was no corroboration for the agreement Daniel alleged he made with MJR to perform site supervision, a key claim in this case. This all indicated to me that these claims were asserted after the event to pressure the Defendants. Mr. Lachmansingh asserted that these claims were reasonable in light of Rocco’s acknowledgement at discovery that Remo and Daniel should be paid for the work they did at Lloyd George and Carnarvon. I fail to see how this statement justifies the December 31, 2007 invoices.
While I will not conclude that this conduct qualified for sanctions under CLA section 86(1)(i), I do conclude though that this conduct is what is contemplated by Rule 57.01(1)(e), namely “conduct of any party that tended to . . . lengthen unnecessarily the duration of the proceeding.” It merits sanctions.
d) There is the added reason that the Parma bill of costs does not decipher between the costs it incurred in relation to MJR, against which Parma succeeded, and those it incurred in relation to the other Defendants, against which Parma did not succeed. I, therefore, cannot make a rational order as to costs as against MJR, even if I were inclined to do so.
[20] I have also decided to deny the non-MJR Defendants a costs award as against Parma (with the exception of the costs previously ordered by Master Polika) for the following reasons:
a) The Defendants made concessions concerning the November 30, 2007 invoices at trial that should have been made earlier. This would have shortened the trial.
b) They raised counterclaims that were withdrawn at trial.
c) They raised a major complaint about the failure by Parma to produce the original of Rocco’s accounting ledger. Parma’s counsel found the original ledger just before closing argument. A major delay in the trial ensued as a result at the request of the Defendants. In the end, the ledger did not figure significantly in my decision. Furthermore, as Mr. Lachmansingh pointed out, it appears that Rocco had in his possession copies of the relevant portions of the ledger. I find that the Defendants caused an unwarranted delay in the trial on account of this issue.
d) The Defendants’ costs outlines do not decipher between the costs MJR incurred, which are not recoverable, and the costs the other Defendants incurred, which arguably are.
[21] Both parties raised several complaints against each other about the conduct of the trial. Mr. Lachmansingh criticized the Defendants for failing to admit the authenticity of phone records that Parma introduced on the eve of trial. He criticized the Defendants for introducing documents at trial that had not been previously produced. Mr. Vieni criticized Parma for introducing the phone records on the eve of trial and for producing the original accounting ledger no sooner than the eve of closing, thereby causing two delays in the trial. He criticized Parma for questioning my impartiality a few months before trial, and then withdrawing from that position later about a month before the trial.
[22] As to the ledger, I have already addressed that point. As to the other criticisms, all have some validity. I give them weight only to the extent that they bolster my decision not to award costs to either side, other than as previously ordered by Master Polika.
(vi) Costs award
[23] Therefore, the only costs award I am prepared to make, and do herewith make, is the award of $2,556.68 that Master Polika ordered on January 10, 2012 be made in favour of the Defendants in the event they succeeded on the lien timeliness issue.
Lien security
[24] MJR obtained orders in late May, 2008 vacating the Parma claims for lien from the titles to the 24 and 26 Carnarvon properties upon the posting by MJR of cash security. On February 11, 2010, MJR obtained an order from Master Polika reducing this security to account for the amounts that had been included in these two claims for lien for work done on 22 Carnarvon. The resulting security that remains in court for the two Parma claims for lien on the Carnarvon properties are as follows: $87,981.49 of cash for the Parma claim for lien on 24 Carnarvon; $97,454.16 of cash for the Parma claim for lien on 26 Carnarvon.
[25] On account of the order of Master Sprout dated September 5, 2008, MJR obtained an order on September 11, 2008 vacating the Parma claim for lien from the title to the Lloyd George properties upon the posting by MJR of cash security in the amount of $181,250. This cash security remains in court.
[26] Because I declared the Parma lien rights expired, I must determine what is to be done with this cash security. I received written submissions on this issue from both Messrs. Vieni and Lachmansingh. I subsequently also received correspondence from counsel for the Defendants in the Joint Venture Action, James F. Diamond. As a result, I required oral argument on this issue, which took place on July 10, 2014. Mr. Diamond delivered a written brief, as did Mr. Lachmansingh.
[27] Parma’s position is this security should either be paid to Parma in satisfaction of its judgment against MJR or that it be paid into court to the benefit of the Joint Venture Action on the basis that this security is a “specific fund” under Rule 45.02. The Defendants position is that cash should be paid to them.
[28] For the reasons set out below, I have determined that the cash security should be paid to the non-MJR Defendants.
[29] The following are critical facts to be born in mind:
a) In the Joint Venture Action, on February 16, 2010, Justice Himel ordered amongst other things that the cash security for the Parma claims for lien that was not used to satisfy the Parma liens was to be paid into court to the benefit of the Joint Venture Action to be used there to pay the trade claimants’ remaining claims as specified in the order (including the claim of Parma). This aspect of the order was subsequently varied by the order of Justice Hoy dated March 30, 2011 which deleted the requirement to have these monies paid into court to the benefit of the Joint Venture Action and deleted the requirement that these funds be used to pay Parma. All that remained of this aspect of the Himel order was the requirement to use the funds to pay the non-Parma trade claims. It is undisputed that the non-Parma trade claims have been satisfied by other means. Therefore, I am not bound by any express court order as to what to do with the cash security.
Parma argued that the Sprout order of September 5, 2008 indirectly bound me to pay the cash into court to the benefit of the Joint Venture Action. Master Sprout ordered that the “net proceeds of sale” of the Carnarvon and Lloyd George properties be paid into court to the benefit of the Joint Venture Action. The order defined “net proceeds of sale” to exclude, amongst other things, the cash necessary to vacate the Parma claims for lien on the Lloyd George properties. By this time, the cash security had been posted for the Parma claims for lien on the Carnarvon properties some time earlier. Mr. Lachmansingh argued that, as the cash security for the Parma claims for lien came from the sale proceeds of the Carnarvon and Lloyd George properties, Master Sprout’s order is to be read as impliedly requiring that the cash security be paid into court to the benefit of the Joint Venture Action in the event the Parma claims for lien are found to be invalid.
I do not agree. Firstly, the security for the Parma claims for lien on 24 Carnarvon did not come from the sale proceeds for the Carnarvon and Lloyd George properties. Secondly, the Sprout order does not expressly provide for the use to be made of the cash security in the event the Parma claims for lien are found invalid. I am not prepared to impute a meaning that is not obvious on the face of the order and that appears to contradict the subsequent Hoy order which expressly deleted the requirement in the Himel order to have those monies paid into court to the benefit of the Joint Venture Action.
b) The cash security in court does not belong to MJR. Parma took the position that the cash belonged to the Joint Venture. The Defendants were not prepared to go that far, although they agreed that the cash did not belong to MJR. This is important because the moving party that obtained the vacating orders was MJR.
[30] I will now deal with each of the issues raised by the parties.
(i) Satisfaction of the Parma judgment
[31] Parma argued that the security should be used to pay the Parma judgment against MJR. It relied upon the decision of Master Albert in D’Urzo Demolition Inc. v. Damaris Developments Inc., 2012 CarswellOnt 8750 (Ont. Master). In this case, Master Albert dealt with the issue of whether the costs and interest on a lien judgment should be ordered paid from the portion of the posted security that was not otherwise used to pay the lien judgment. The lien judgment was less than the amount of the lien claim and therefore less than the amount of the letter of credit that had been posted by the contractor for the lien claim. The posted security for costs in the letter of credit was less than the cost award. Relying on her general jurisdiction in CLA section 51, Master Albert ordered that the “overage” in the lien security be used to pay the costs and interest on the lien judgment that was not expressly covered by the lien security. She stated the following in paragraph 51:
Once a judgment is made and a defendant is indebted to the lien claimant for the full amount found owing (the lien plus costs plus interest) then if the court is holding the defendant’s cash it is only logical that the court require its award to be enforced by paying that cash to the lien claimant in total satisfaction of the judgment before allowing any of the cash to be returned to the defendant, absent any competing priority claims by other creditors.
[32] This case is distinguishable from the case in point on a fundamental point. The money in court does not belong to MJR. Therefore, the court has no basis under CLA section 51 to order that the posted security be used to pay the Parma judgment against MJR. I do not do so.
(ii) Specific fund
[33] Parma’s second argument is that the cash security is a “specific fund” against which the estate of Remo has a serious claim in the Joint Venture Action and that the court should under Rule 45.02 order that the security be paid into court to the benefit of the Joint Venture Action as a result.
[34] The leading case on the test to be followed under Rule 45.02 is the decision of the Court of Appeal of Ontario in Sadie Moranis Realty Corp. v. 1667038 Ontario Inc. 2012 ONCA 475 (Ont. C.A.). Here the court was concerned about the claim by a listing agent against its client and the client’s lawyer for unpaid commission on a land sale. The sale proceeds were in the possession of the lawyer. The Court of Appeal indicated in paragraph 18 that the moving party, in that case the plaintiff, needed to establish three things:
a) the plaintiff claims a right to a specific fund;
b) there is a serious issue to be tried regarding the plaintiff’s claim to that fund; and
c) the balance of convenience favours the relief sought by the plaintiff.
[35] The Court of Appeal focused on the first part of the test. It held in paragraph 19 that the fund must be readily identifiable when the order is made, and that the plaintiff must assert a “legal right” to that specific fund as a claim in the litigation. It held further that the “legal right” need not be a proprietary claim, which earlier jurisprudence had held. However, it must be more than a mere damage claim. The Court held that the agent did not succeed because its claim was based on a contract that did not specify that the commission was to be paid from the sale proceeds. It would appear that the claim must be almost that of a proprietary claim.
[36] It should be noted that Master Polika previously ruled on this issue in relation to the lien security for the Parma claims for lien on the Carnarvon properties. The decision is dated February 11, 2010. At that time, MJR brought motions for orders reducing the lien security, which succeeded. Remo brought motions at that time in each of the lien actions for orders that any reduction in security be paid to the credit of the Joint Venture Action on the basis that the cash security was a “specific fund” under Rule 45.02.
[37] Master Polika found that the security for the Parma claim for lien on 26 Carnarvon was a “specific fund” under Rule 45.02 as it had been derived from the proceeds of sale of 24 Carnarvon, which itself was specific property against which Remo was asserting a trust claim in the Joint Venture Action. He ordered that the security reduction concerning the Parma claim for lien on this property be paid to the credit of the Joint Venture Action. He did not make the same order for the reduced security on the Parma claim for lien on 24 Carnarvon, stating only that Remo had failed to show that this security was a specific fund. He made no order concerning the security for the Parma claims for lien on Lloyd George.
[38] After reviewing the submissions of the parties, I have decided that Parma has not met the onus of showing that the cash security in this case is a “specific fund.” Here are my reasons for this conclusion:
a) This is an exceptional remedy as it amounts to pre-trial execution. As a result, the onus is on the moving party to prove all elements of the test; see Sadie Moranis Realty Corp. v. 1667038 Ontario Inc., 2012 ONCA 475, para. 18.
b) Master Polika’s decision is persuasive, and may even be binding, as to the issues of whether the cash security for the Parma claim for lien on 26 Carnarvon meets the first two aspects of the Rule 45.02 test, namely whether this security forms a specific fund against which Remo makes a serious, non-damage claim in the Joint Venture Action. He referred to Remo’s assertion of a trust claim to the subject land in the Joint Venture Action, and to the undisputed fact that the proceeds of the sale 24 Carnarvon, a Joint Venture property, was used to post the security for the Parma claims for lien on 26 Carnarvon.
Master Polika’s decision is, however, not persuasive and not binding as to his finding on the final aspect of the test, namely that the balance of convenience favors the order being sought. It is not persuasive because he does not explain the basis for this conclusion. It is not binding because he was dealing with reduced security under CLA section 44(5). I, on the other hand, have made a final declaration of lien expiration under CLA section 45 which makes it mandatory in section 45(3)(a) that I return cash security to the person who paid the cash into court. There is no such mandatory provision when the court orders a reduction in security, see CLA section 44(5). As a result, I must consider much more closely the balance of convenience test than Master Polika did in his ruling.
c) Master Polika made no order as to the cash security for the Parma claim for lien on Lloyd George. The same reasoning would apply though. In the Joint Venture, the estate of Remo asserts a trust claim against the Lloyd George lands. Furthermore, Master Sprout’s order makes it clear that the cash security for the Parma claim for lien on Lloyd George comes from the proceeds of sale of the Carnarvon and Lloyd George properties. However, again, the balance of convenience needs to be examined closely given the mandatory provision of CLA section 45(3)(a).
d) Master Polika ruled that Remo failed to show that the reduced security for the Parma claims for lien on 24 Carnarvon formed a specific fund. A factual dispute as to the source of the cash security may have been the basis for this ruling. The Defendants maintained before me, and Ms. Pulcini gave evidence, that the cash came from loans from her father and Rocco’s father-in-law. Parma maintained that the cash security came from the sales of Joint Venture properties, particularly the sale of 27A and 27B Roseland Avenue. A dispute arose between the parties about certain documents concerning the sale of the Roseland Avenue properties (produced in the Joint Venture Action) that Parma sought to introduce in argument. The Defendants opposed this attempt, relying on the deemed undertaking rule.
It is not necessary that I determine this factual dispute or the documents issue, given my decision on what I have determined is the more vital issue, namely the balance of convenience test. Suffice it to say that, given the uncertainty in the evidence about the genesis of this cash security, I would have been hard pressed to find that this cash security was a specific fund.
e) The requirement on the moving party to produce cogent evidence that the balance of convenience favours the order is clear from the case authority presented. One case discussed this issue at some length. In Kotzer v. Ackerman, 2013 CarswellOnt 9325 (Ont. Sup. Crt), the underlying case was a dispute between two property investors about the proceeds of sale of one of the properties they had purchased and developed. The investors deposited monies into an investment account over which one of the investors had a power of attorney. The subject land was purchased and developed with monies deposited into the account. The land was sold and there was a dispute over how much the investor without the power of attorney was to be paid. He sued. The sale proceeds that were subject to the claim were ordered preserved in the investment account by an earlier interim interim order. In the action, the plaintiff’s claims included an allegation of a relationship of trust with the other investor given his power of attorney over the account. The plaintiff moved for an order under Rule 45.02 declaring the monies in the account a specific fund.
Mr. Vieni relied on this case to argue that Remo’s claim in the Joint Venture did not amount to a legal claim to the sale proceeds for the purpose of Rule 45.02. Justice Edwards reasoned in the Kotzer case that, while the plaintiff might in the end make out a claim for some portion of the sale proceeds, he had not asserted a “proprietary claim” to those proceeds for the purpose of Rule 45.02. The plaintiff, according to Justice Edwards, was just an investor who had used the account as an investment vehicle. I find that this aspect of the ruling not authoritative or persuasive. In Sadie Moranis, the Court of Appeal made it clear that the moving party’s claim to the fund does not have to be proprietary. Justice Edwards referred to this case but, in my view, misapplied it. Had the standard as outlined by the Court of Appeal been properly applied, in my view, the outcome on this point would probably have been different. In any event, even with the standard that was applied, the ruling is suspect on this point. A trust claim would appear to be a proprietary claim.
In any event, the aspect of the ruling that is authoritative and persuasive concerns the test of balance of convenience. Justice Edwards held that, in any event, the plaintiff lost the motion on account of the lack of evidence that the balance of convenience favoured the order. In paragraph 15, he stated that, while the plaintiff had “concerns about what the defendants might do to possibly frustrate his ability to execute on any judgment he might obtain,” this was not sufficient. He stated that the “moving party has an obligation to put some evidence before the court that would raise concerns that the defendants will in fact take/or has taken steps to make execution impossible.” Justice Edward gave some examples: evidence that the defendant intends to leave the jurisdiction; evidence that the defendant is insolvent and will discontinue carrying on business; evidence of specific steps the defendant has taken to frustrate a judgment.
This discussion is consistent with what the Court of Appeal stated about this aspect of the test in paragraph 20:
The second and third requirements [of the Rule 45.02 test], though not centrally in issue in this case, are equally important in manifesting the policy behind the rule. They ensure that interference with the defendant’s disposition of assets is limited to cases where the plaintiff has a serious prospect of ultimate success, and there is something compelling on the plaintiff’s side of the scales, such as a real concern that the defendant will dissipate the specific fund, that is sufficient to outweigh the defendant’s freedom with his or her property.
f) The need for cogent evidence from the moving party of the balance of convenience is, in my view, accentuated by CLA section 45(3)(a). This is the subsection that makes it mandatory that the court return the cash security to the payer if the lien is declared expired.
There was argument over whether Rule 45.02 was inconsistent with CLA section 45(3)(a) and therefore excluded by operation of CLA section 67(3). I rule that Rule 45.02 is not inconsistent with section 45(3)(a) since the rule only requires that the specific fund, once determined, be secured pending the resolution of a dispute over the fund. It does not deprive the purported fund owner of the fund. Such a deprivation would contradict section 45(3)(a) which requires that the cash security be returned to the payer.
Section 45(3)(a) does, however, accentuate the third branch of the test for a specific fund, namely the balance of convenience. Because of the mandatory requirement to return the cash security to its payer, the moving party must provide cogent evidence of a real danger that the fund will be dissipated if paid to the payer.
g) The most that Parma has submitted in this case on this point is what is stated in paragraph 24 of Mr. Lachmansingh’s written submission of July 4, 2014, namely that Parma has a “very real concern that [the cash security] will otherwise be dissipated.” No evidence was presented in support of this proposition. Such an unsubstantiated concern is exactly the kind of concern that Justice Edwards ruled in Kotzer did not meet the balance of convenience test in Rule 45.02. I, therefore, find that Parma has failed to meet its onus under Rule 45.02.
[39] The Defendants challenged Parma’s standing to raise this issue, as it was really an issue for the estate of Remo to raise. I note that no formal motion was brought before me by the estate of Remo under Rule 45.02, as had been the case before Master Polilka.
[40] In my view, there was sufficient ambiguity about this issue to justify proceeding with a formal ruling on the merits. Motions do not necessarily have to be in writing, and non-parties with an interest in the issue can move in the proceedings. This is what Remo did before Master Polika. I have therefore proceeded with the substance of the motion and have made my ruling on that basis.
[41] For the reasons stated, I rule that the cash posted as security for the Parma claims for lien be returned to MJR for payment to the parties from whom it received the funds.
Conclusion
[42] In summary, I rule that Parma is to pay the Defendants costs in the amount of $2,556.68, in fulfillment of Master Polika’s earlier order.
[43] I also rule that the cash posted as security for the Parma claims for lien be returned to MJR for payment to the parties from whom it received the funds.
[44] There was some discussion about the prejudgment interest rate to be applied on the Parma judgment against MJR. All in the end agreed that it should be 4.8% and should run from November 30, 2007, the date of the invoices on which these claims were articulated, to the date of this ruling. Post-judgment interest as mandated by the CJA applies to this case and runs from the date of this ruling.
[45] The parties are to agree upon a form of report, and submit same to me for my review and execution upon my return to the office on September 15, 2014.
MASTER C. WIEBE
Released: August 15, 2014
COURT FILE NO.: CV-08-351729
DATE: August 15, 2014
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
PARMA GENERAL CONTRACTORS INC.
Plaintiff
- and -
ROMINA PULCINI, M.J.R. CANADA
ENTERPRISES INC. and THE TORONTO
DOMINION BANK
Defendants
COSTS DECISION
Master C. Wiebe
Released: August 15, 2014