CITATION: Alary v. Brown 2015 ONSC 3021
OTTAWA COURT FILE NO.: 11-52951
DATE: 2015/05/12
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Richard Alary and Elan Maria Alary
Plaintiffs
– and –
Timothy Alexander Brown and Timothy Vachon and Costco Wholesale Canada LTD. and Crowne Plaza Hotel and John Does Inc. #1 and John Doe Inc. #2
Defendants
Anthony L.C. Mineault for the Plaintiffs/Defendants by Counterclaim
Sean Van Helden for the defendant - Crowne Plaza Hotel
HEARD: March 17, 2015
REASONS on Motion for security for costs
R. Smith j.
[1] Crowne Plaza Hotel has brought a motion for security for costs as the plaintiffs are ordinarily resident outside of Ontario, namely in Winnipeg, Manitoba.
[2] The plaintiffs have obtained an insurance policy of $100,000 to cover an adverse cost award which they submit provides adequate security for costs for Crowne Plaza. The plaintiffs also submit that they are impecunious and cannot afford to pay security for costs,, that Richard Alary was a victim of crime and s.4(2) of the Victims Bill of Rights protects him from being ordered to provide security for costs, and that they have a meritorious claim.
[3] Crowne Plaza submits that the adverse costs insurance is not equivalent to security being paid into Court as the policy may be terminated and the proceeds cannot be assigned. Crowne Plaza also argues that the plaintiff’s claim is not meritorious, they are not impecunious and the Victim’s Bill of Rights does not apply.
BACKGROUND
[4] The plaintiffs’ claims arise out of two physical assaults on Richard Alary (“Alary”) The first occurred when he was punched and kicked by Timothy Brown (“Brown”) and then punched again shortly thereafter by Timothy Vachon (“Vachon”) in the lobby of the Crowne Plaza Hotel (“Crowne Plaza”) in Ottawa on November 29, 2009 at approximately 2:30 a.m.
[5] Vachon and Brown are both employees of the defendant Costco Wholesale Canada Ltd. (“Costco) who attended Costco’s Christmas party at the Crowne Plaza that evening.
[6] That evening, Vachon was standing outside the Crowne Plaza with a number of other people waiting for a limousine to arrive to drive them home sometime after 2:00 a.m. when Alary is alleged to have made insulting comments about a member of the group as he walked into the Crowne Plaza. Vachon intervened and Alary is alleged to have taunted him and spit in his face before he proceeded to enter the Crowne Plaza. Vachon followed Alary into the Crowne Plaza and an altercation occurred in front of the elevator where Vachon punched him in the face and kicked him in the back as he lay on the ground.
[7] A few minutes later, as Brown was leaving the coat check area he saw Alary lying on the ground. He offered assistance to Alary but he responded in a belligerent manner and Brown then struck him in the face with his fist.
[8] The plaintiff does not have any memory of the events of the early morning of November 29, 2009.
[9] Both Brown and Vachon were convicted of assault on Alary.
[10] The following issues must be decided:
Does the plaintiffs’ adverse cost insurance policy for $100,000 provide Crowne Plaza with adequate security for costs?
Should the Court make an order for security for costs?
ANALYSIS
Issue #1 – Does the plaintiffs’ adverse cost insurance policy for $100,000 provide Crowne Plaza with adequate security for costs?
[11] Rule 56.01(1) states as follows:
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,
a) The plaintiff or applicant is ordinarily resident outside of Ontario; …..
[12] The evidence is uncontested that the plaintiffs reside outside of Ontario and as a result, they bear the burden of proving the effect on them should an order for security for costs be granted. Morton v. Canada (Attorney General), (2005) 2005 6052 (ON SC), 75 O.R. (3d) 63 ONSC.
[13] In Morton, the Court stated that in considering what is “just”, the Court must balance the rights of a successful defendant to payment of their costs with the right of plaintiffs to their day in court for the trial of a meritorious action.
Adverse Costs Indemnity Insurance
[14] The plaintiffs have obtained a $100,000 insurance policy to pay for any adverse costs that they are ordered to pay if they are not successful in their action. The plaintiffs have paid $4,500 for this insurance policy.
[15] However, the policy contains a number of exceptions outlining circumstances where the insurance proceeds would not be paid including the following:
(a) If the plaintiff does not accept their counsel’s recommendation to accept an offer to settle;
(b) If the plaintiff changes counsel and the company does not agree with the new counsel;
(c) The plaintiffs decide to represent themselves;
(d) Failure to attend medical examinations;
(e) Failure to advise of an adverse costs award within 15 days;
(f) Failure to inform the company of any offer to settle within 30 days of its receipt or 5 days of expiry;
(g) If the policy is assigned.
[16] The policy states that the funds are to be paid to the plaintiff’s lawyer in trust and also states that any settlement funds received by the plaintiff will be set off against the amount it is required to pay.
[17] The adverse costs insurance policy provides some security that the non-resident plaintiff will have funds available to pay costs; however, these funds are conditional on the plaintiffs maintaining the insurance policy in force. Crowne Plaza submits that to be equivalent to monies being paid into Court, it should be named as an “Indemnitee” under the policy without any conditions and an order should be made preventing Bridgeport Indemnity and the plaintiffs from cancelling the adverse costs insurance policy.
[18] I am unable to make this type of order as Bridgeport Indemnity is not a party to this motion and the policy before me allows the insurer to terminate coverage in a number of circumstances.
[19] The plaintiffs have referred me to the consent order of JT Prowse, a Master in the Court of Queen’s Bench, Alberta, where the plaintiff agreed to provide a certificate of adverse cost insurance from Bridgeport as security for costs. The order also stated that if the policy was cancelled, the parties were to advise the Defendants, who could then seek an alternate form of security for costs. This case has limited persuasive value because it was made on consent. Secondly, if the policy was cancelled partway through the trial or at the end of the trial, the defendant would not have any security and would have already incurred the legal costs of defending the case.
[20] The plaintiffs have also referred to two cases, one in the United Kingdom and one in Ireland where adverse costs insurance referred to as “after the event” insurance or “ATE” insurance was accepted as adequate security for costs. The cases are Verslot Dredging BV v. HDI Gerling Vesigherung AG English High Court, unreported, dated February 4, 2013; and Geophysical Service Centre Co v. Dowell Schlumberger (ME) Inc. [2013] EWHC 147 (TCC), dated January 18, 2013.
[21] The Verslot decision was unreported and is not of great assistance. In Geophysical, Justice Stuart Smith held that such after the event insurance policies along with contingency fees allowed parties to gain access to justice.
[22] The ATE Insurance policy in place in Geophysical contained a term that the policy could be cancelled in a number of circumstances such as: if the solicitor was dismissed without good reason, the conditional fee agreement was terminated or the solicitor terminated the agreement. However in the case of termination or cancellation of the policy, the Insurer remained liable to pay for any costs awarded to a defendant incurred up to the date of cancellation. This is not the case in the policy before me and this is a substantial difference. If the plaintiffs were ordered to advise Crowne Plaza immediately if the insurance policy was cancelled, it could bring a motion for security for costs at that time for reconsideration; however, by then, substantial costs may have been incurred by the defendant for which there would not be any security.
[23] The High Court of Ireland in Greenclean Waste Management ltd v. Leahy p/a Maurice Leahy & Co. Solicitors (No. 2) [2014] IEHC 314 (05 June 2014) considered an ATE insurance policy and held that adverse costs insurance was not champertous. This case is not of assistance as adverse costs insurance policies are usually combined with contingency fee agreements which are permitted in Ontario and are not considered champertous.
[24] The availability of an adverse costs insurance policy is not equivalent to the payment of a fixed amount of money into Court, but I find that it is a factor which mitigates against ordering security for costs. The Bridgewater insurance policy purchased by Alary does not contain a term stating that the insurer would pay for legal costs incurred by the defendant seeking security for costs up until the policy was cancelled or terminated. Notwithstanding, I find that the existence of the adverse insurance policy, even without the term that the insurer would be pay costs for a defendant up until it was cancelled, is still a factor to be considered.
Disposition of Issue #1
[25] For the above reasons, I find that the adverse costs insurance policy without a term that it would pay for costs occurred by a defendant up until the policy was cancelled, is not equivalent or an adequate substitute for the payment of security into Court but it is a factor to be considered.
Issue #2 – Should the Court make an order for security for costs?
MERITS OF THE PLAINTIFFS’ CLAIM
[26] The plaintiffs submit that there is merit to their allegations that Crowne Plaza over-served the defendants Brown and Vachon with alcohol at the Costco Christmas party and that their state of intoxication was a partial cause of the assaults on Richard Alary. There is some merit to this argument if the facts as pleaded are proven. I find that this claim is not frivolous and cannot be found to have no chance of success at this stage.
[27] The plaintiffs also allege that there was inadequate security in the lobby on the evening in question. I find there is minimal merit to this allegation as the defendant Vachon was outside the Crowne Plaza when he became involved in a verbal altercation with the plaintiff. Vachon then followed him inside the Crowne Plaza lobby and punched him in the face. The plaintiffs claim that Crowne Plaza was negligent and breached its duty of care to the plaintiff by failing to prevent Vachon from punching the plaintiff has little chance of success in these circumstances.
Impecuniosity
[28] The plaintiffs allege that they are impecunious for purposes of providing security for costs. They have filed a substantial amount of financial information including their net monthly income of $5,896.72 and details of their household expenses of $4,688.81 per month. Their monthly budget shows a surplus of $1,207.91 per month.
[29] The plaintiffs anticipate having to change their vehicle in the near future and will incur additional expenses to allow their daughters to attend post-secondary education.
[30] The plaintiffs’ house is valued at $335,000 but there is a mortgage of $201,157, a line of credit of $38,802, credit card debts of $25,058.14 and property taxes owing of $3,490.10. The net equity in their home is $66,492.06.
[31] In Montrose Hammond & Co v. CIBC World Markets Inc., 2012 ONSC 486, 112 O.R. (3d) 151, the Court declined to order security for costs where the plaintiffs had an unencumbered home with a value of $700,000 but they were unemployed, owed $90,000 on a line of credit and may have owed Revenue Canada $260,000. The Court also found that the plaintiff might have a meritorious claim and it would be unjust if they were prevented him from reaching trial as a result of poverty.
[32] I am satisfied that while Alary is employed with the Federal Government and earns a reasonable income and his wife is also employed, the plaintiffs financial situation is such that they are quite heavily indebted and do not have any liquid assets that would allow them to pay $93,000 into Court as security for costs. I find that it would be unjust just to deprive them of the ability to advance a claim with some merit in court with their limited financial circumstances.
Victims’ Bill of Rights
[33] The plaintiffs also argue that an order for security for costs should not be made against them because Alary was a victim of two criminal acts.
[34] Section 4(2) of the Victims Bill of Rights 1995, S.O. 1995, c 6 states as follows:
A judge shall not make an order under the rules of court requiring a victim to provide security for costs unless the judge, having considered the spirit and purpose of this Act, considers that it is necessary to do so in the interest of justice 1999, c. 6 S.4 (2).
[35] Both Vachon and Brown were convicted of assaulting Mr. Alary. In the case of R v. Abel, 2011 OJ N. 314, Master Short held that s. 4 of the Victims Bill of Rights applied to every other defendant in the civil proceeding where the actions arose in the same proceeding and were clearly related to the sequence of facts in the criminal offences. In this case, the claim against Crowne Plaza relates to the same sequence of events where Mr. Alary was assaulted by Vachon and Brown in the hotel lobby after a Christmas party was held at their hotel.
[36] I agree with Master Short that the spirit and purpose of the Victims Bill of Rights would apply to a co-defendant who did not commit a criminal offence, where their actions are part of the series of events involving a plaintiff who is the victim of a criminal act.
Disposition of Issue #2
[37] Considering that Alary, who is impecunious, who was a victim of a crime, where there is some merit in his claim against Crowne Plaza, and where there is a $100,000 adverse costs insurance policy in place, I find that it would not be just to require the plaintiffs to pay $93,000 security for costs in all of the circumstances.
[38] Notwithstanding the above finding, the plaintiffs are ordered to advise Crowne Plaza immediately if the adverse costs insurance policy is terminated or cancelled as this would be a change in circumstances.
COSTS
[39] The parties may make brief submissions on costs within 10 days.
The Hon. Mr. Justice Robert J. Smith
Released: May 12, 2015
CITATION: Alary v. Brown 2015 ONSC 3021
OTTAWA COURT FILE NO.: 11-52951
DATE: 2015/05/12
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Richard Alary and Elan Maria Alary
Plaintiffs
and –
Timothy Alexander Brown and Timothy Vachon and Costco Wholesale Canada LTD. And Crowne Plaza Hotel and John Does Inc. #1 and John Doe Inc. #2
Defendants
REASONS FOR Decision
R. Smith J.
Released: May 12, 2015