Central Station Security v. Avenue Security Centre, et al., 2015 ONSC 7549
CITATION: Central Station Security v. Avenue Security Centre, et al., 2015 ONSC 7549
COURT FILE NO.: 14-61201
DATE: 2015/12/02
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Central Station Security Services Inc., Applicant
AND
Avenue Security Centre Inc., James Saikaley, Micheline Saikaley and Avenue Lock and Security Ltd., Respondents
BEFORE: Madam Justice Sylvia Corthorn
COUNSEL: Dave Morin-Pelletier, for the Applicant
Christopher S. Spiteri, for the Respondents
HEARD: By written submissions
RULING AS TO COSTS
[1] This ruling follows my endorsement dated September 16, 2015 with respect to an application for enforcement of an arbitration award. The parties to the arbitration were Central Station Security Services Inc. (“Central”) and Avenue Security Centre Inc. (“Avenue”). The arbitrator found in favour of Central and ordered Avenue to pay $71,905 (inclusive of costs) to Central. Central attempted to enforce the arbitration award by way of an application. The matter came before me on July 24, 2015.
[2] On the return of the application, the respective positions taken by the respondents (meaning all respondents other than Avenue Lock and Security Ltd.) resulted in the matter before me on July 24, 2015 being converted to a motion on a preliminary issue. The issue was:
Does this Court have the power on this application to enforce the arbitration award against the individual respondents?
• If so, then the balance of the application is to be returned before me at a later date.
• If not, then to what relief, if any, is the applicant entitled at this time?
[3] I determined that the applicant is not entitled, by way of application, to an order for enforcement of the arbitration award against the individual respondents. The applicant’s claim in that regard was converted to an action in respect of that issue with the application to be disposed of by the trial judge. Directions with respect to how the action is to proceed were included in my endorsement.
[4] The parties were given an opportunity to reach an agreement with respect to costs. The parties did not reach such an agreement. Their respective costs submissions were delivered within the deadline specified in my September 2015 endorsement (“the Endorsement”).
Decision
[5] For the reasons set out below, I order that neither the applicant nor the respondents are entitled to their costs on the motion to determine a preliminary issue.
Positions of the Parties
a) The Applicant
[6] The applicant’s position is, in summary, as follows:
• An application “could have been” the most expeditious and cost-effective method of enforcement of the arbitration award.
• The contents and timing of delivery of the affidavit of Athena Basta (“the Basta affidavit”), on behalf of the respondents, contributed to confusion with respect to substantive matters and to delay of the hearing of the application.
• The Basta affidavit was, as discussed in the Endorsement, deficient in terms of the evidentiary requirements on an application (sub-rule 39.01(5) of the Rules of Civil Procedure).
• The choice of Ms. Basta as the affiant for the responding materials and the lack of affidavit evidence from either of the individual respondents contributed to confusion and delay.
[7] Central seeks its costs of the motion on a preliminary issue on a substantial indemnity basis or, in the alternative, its costs of the preliminary motion in the cause.
b) The Respondents
[8] The respondents say that they were “entirely successful in having the application dismissed”. They seek their “costs of the application” on a substantial indemnity basis because it was clear from the outset that an application was not the proper method by which to attempt to enforce the arbitration award.
[9] The respondents also rely on communication between counsel for the parties and offers to settle made on behalf of the respondents. In a letter which post-dates the respondents’ submissions, counsel for the applicant requests that I give no consideration to the offers because they: a) relate to the application in the main; and b) are irrelevant to the determination of the preliminary issue.
Analysis
[10] I find that it should have been patently clear to the applicant that an application was not the appropriate method by which to attempt to enforce the arbitration award as against only the individual respondents, neither of whom was a party to the arbitration. The Endorsement sets out my agreement with the respondents on the following points, each of which was readily identifiable by the applicant before it proceeded by way of application:
a) The relief sought was something other than strict enforcement, pursuant to sections 6 and 50(1) of the Arbitration Act, S.O. 1991, c. 17, of the arbitrator’s award;
b) The applicant is not entitled to rely on sub-rule 14.05(2) of the Rules of Civil Procedure (“Application Under Statute”) as the basis for proceeding by way of application;
c) For the matter to proceed by way of application, the subject-matter must fall within one of the categories of claims enumerated in sub-rule 14.05(3) of the Rules of Civil Procedure (“Application Under Rules”); and
d) The only category of claim into which the application might have fallen is found in sub-rule 14.05(3)(h) of the Rules of Civil Procedure – “any matter where it is unlikely that there will be any material facts in dispute”.
[11] With respect to point (d) above, it should also have been identified by the applicant, long before the matter proceeded before me, that it would not be able to satisfy the criteria of sub-rule 14.05(3)(h) of the Rules of Civil Procedure. Stated another way – it should have been patently obvious to the applicant that there were and remain “material facts in dispute” with respect to the potential to enforce, as against the individual respondents, the arbitration award.
[12] The applicant had much more cost-effective options available to it – proceeding by way of an action from the outset or converting the application to an action once it was clear, as it was prior to the date of the hearing on the preliminary issue, that there were material facts in dispute.
[13] For those reasons, I find that the applicant is not entitled to its costs of the preliminary motion before me. The application has been converted to an action. The applicant will, in due course, have the opportunity to pursue recovery of its costs of the action and of the application once both are determined by the trial judge or as may otherwise be agreed between the parties. Those costs shall not, however, include the costs associated with the motion on a preliminary issue.
[14] The respondents are in error when they describe the application as having been dismissed. The application was not dismissed. As per paragraph 46, items 1 and 2 of the Endorsement:
The applicant’s claim for enforcement of the arbitration award of Arbitrator Stauffer dated September 16, 2013 and the costs award of Arbitrator Stauffer dated November 15, 2013 is to proceed by way of action.
This application is to be disposed of by the trial judge.
[15] The respondents are not entitled to their costs of the preliminary motion in large part because of the manner in which they approached their responding materials and matters arising from those materials. As noted at paragraph 12 of the Endorsement, “The Basta affidavit is, in almost its entirety, inappropriate for an application.” The egregious deficiencies in the Basta affidavit are set out in paragraphs 13 to 19 of the Endorsement.
[16] In addition to the form and content of the Basta affidavit, there is the matter of the timing of service of the affidavit. The Basta affidavit was sworn on May 7, 2015. The affidavit of service of Nathan Boivin, sworn on May 8, 2015: a) states that the Basta affidavit was served by courier; and b) does not state when the Basta affidavit was served. Presumably, service of the Basta affidavit was effected on May 7 or 8, 2015.
[17] In its costs submissions, the applicant says:
• The Basta affidavit was served only three business days prior to the May 14, 2015 return date for the application.
• The timing of service of the Basta affidavit resulted in the application being adjourned (to the July date).
• Cross-examination of Ms. Basta was required and contributed to the adjournment of the matter from May to July 2015.
[18] When cross-examined on her affidavit, Ms. Basta was asked about a Certificate of Dissolution dated in 1999 for “Avenue Security Centre Inc.” (the corporation against whom the 2013 arbitration award was made). She was unable to confirm that the individual named “Jim” who signed the Certificate of Dissolution was the individual respondent, James Saikaley. Ms. Basta undertook to advise whether the Certificate of Dissolution was signed by that individual: see page 14, question 46 of the transcript of the cross-examination.
[19] In its costs submissions, the applicant says that the answer to that undertaking (and to two other undertakings given by Ms. Basta on June 4, 2015) was provided on July 23, 2015 – the day prior to the return of the matter before me. It is difficult to conceive that it would take the respondents in excess of five weeks to confirm that it was James Saikaley’s signature on the Certificate of Dissolution and satisfy the undertaking in that regard. The end result is that the applicant was given no time, without adjourning the matter again, to consider the significance of the answer to the undertaking before proceeding with the matter on the July date.
[20] The manner in which the respondents approached their responding materials was a significant contributing factor to the “evidentiary vacuum” in which I was required to decide the preliminary issue. The matter scheduled to be heard on July 24, 2015 was the application on its merits. It was not until after counsel for the parties made initial submissions that I determined that the matter would proceed on the basis of a motion on a preliminary issue.
[21] Had the matter proceeded on July 24, 2015 as an application, I would have had significant reservations about deciding any substantive issues based on the contents of the Basta affidavit: See Re Becker (1986), 57 O.R. (2d) 495 (Surr. Ct.) – a contentious matter is not to be disposed of on an application on the basis of affidavits on information and belief. It would have been open to me to refuse to receive the Basta affidavit: See Wiley, Lowe & Co. v. Gould, [1958] O.W.N. 316 (H.C.) – the Court may refuse to receive affidavits based on information and belief and may invoke the best evidence rule.
[22] The respondents are not entitled to their costs of the preliminary motion. They too will be in a position, in due course, to pursue recovery of their costs of the action and the application. The costs, if and when pursued, shall not include the costs of the motion on the preliminary issue.
Offers to Settle
[23] The respondents include in their submissions copies of an offer to settle dated January 2014 and an offer to settle dated July 23, 2015. The terms of the January 2014 offer to settle include that the payment of a specified sum by the respondents to the applicant:
[I]n full and final settlement of any past, present, future claims, action, causes of action, suits … which may have been or may hereafter be sustained by either of them … and without limiting the generality of the foregoing, from any and all matters that were pleaded in, or could have been pleaded at the Application bearing file number No. 14-61201.
The January 2014 offer also called for the parties to the application to execute a mutual release.
[24] The July 2015 offer to settle is limited to a single term, less than two lines in length, and calls for the dismissal of the application and payment by the applicant of specified amount for the costs of the respondents.
[25] In correspondence from counsel for the applicant which post-dates the costs submissions of the respondents, there is an objection to the reliance by the respondents on the offers to settle. The applicant’s position is that the offers to settle deal with the application in its entirety and they are therefore not relevant to the issue of costs on the preliminary motion. I agree with the applicant in that regard. As noted in paragraph 14 above, the respondents are in error in describing the application as having been dismissed. The substantive issues remain to be determined by way of an action. The offers to settle made by the respondents with respect to the proceeding in its entirety are not relevant to the issue of costs of the preliminary motion.
Summary
[26] In summary, there shall be no costs payable with respect to the preliminary motion at this time and the costs incurred by the parties with respect to the preliminary motion shall not be included in the costs of the action and/or application if such costs are subsequently pursued.
DATE: December 2, 2015
Justice S. Corthorn
CITATION: Central Station Security v. Avenue Security Centre, et al., 2015 ONSC 7549
COURT FILE NO.: 14-61201
DATE: 2015/12/02
ONTARIO
SUPERIOR COURT OF JUSTICE
RE: Central Station Security Services Inc., Applicant
AND
Avenue Security Centre Inc., James Saikaley, Micheline Saikaley and Avenue Lock and Security Ltd., Respondents
COUNSEL: Dave Morin-Pelletier, for the Applicant
Christopher S. Spiteri, for the Respondents
RULING AS TO COSTS
Justice S. Corthorn
Released: December 8, 2015