COURT FILE NO.: CV-14-3239
DATE: 20150805
AMENDED: 20150825
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: SHOKOOFEH YAZDANI, Plaintiff
and
BAHAREH EZZATI, ROYA ARYAIE, TUYEN THAN TRAN and VAN S. PHAM, Defendants
BEFORE: MACKENZIE J.
COUNSEL:
William West, for the Plaintiff/Respondent
Richard J. Campbell, for the Defendants/Moving Parties Bahareh Ezzati and Roya Aryaie
HEARD: March 27, April 9, 2015, and written submissions April 17, 2015.
AMENDED ENDORSEMENT RE: RULE 56.01 SECURITY FOR COSTS MOTION
Amended Endorsement: The text of the original endorsement was amended on August 25, 2015, and the description of the amendment is appended.
August 25, 2015: Para. 27 has been amended to change the amount “$21,049.87” to “$10,497.37”.
Introduction
[1] The action out of which the present motion has arisen relates to a motor vehicle accident which occurred in 2012 in the City of Mississauga, Ontario. The plaintiff, an ordinary resident of the State of California in the USA, was a passenger in a vehicle driven by the defendant Ezzati and owned by Aryaie. The vehicle in which the plaintiff was a passenger was stuck by a vehicle driven by the defendant Tran and owned by the defendant Pham.
[2] The plaintiff suffered personal injuries as a result of the accident. Within the two year limitation period, the plaintiff caused a Statement of Claim to be issued seeking damages in the amount of $1,000,000 arising from her injuries sustained in the motor vehicle accident.
Nature of Relief Sought in the Motion(s)
[3] The defendants move for security for costs against the plaintiff. The defendants also sought an order requiring examination for discovery of the plaintiff in the Province of Ontario. However, the attendance of the plaintiff for her examination for discovery in Ontario together with the travel and accommodation costs for the plaintiff and her spouse for such attendance have since been resolved by a consent order dated March 27, 2015.
[4] The motion for security for costs was the subject of oral argument and written submissions on April 9th and April 17th, 2015 respectively. This endorsement deals with the security for costs motions.
The Positions of the Parties
The Defendants’ Position
[5] The moving party (defendants) essentially takes the position that the plaintiff in responding to the motion has failed to satisfy the test on a motion for security for costs under Rule 56.01(1). In this regard, counsel argues that the plaintiff has failed to adduce any evidence of her financial circumstances or otherwise which would meet the onus on the plaintiff of establishing that posting security for costs would deprive her of the opportunity to pursue her case.
[6] The moving party acknowledges that the gist of the plaintiff’s position on the motion is that an order to require her to post security for costs would constitute financial hardship. However, counsel for the moving party indicates that such a position cannot defeat the motion for security for costs in the absence of an evidentiary foundation for that position.
[7] In dealing with the question of assets within the jurisdiction, the plaintiff referred to a litigation risk insurance policy obtained by the plaintiff relating to the motor vehicle accident. I required the plaintiff during the course of the initial hearing of the motion to file a copy not only of the certificate of insurance but of the insurance policy itself. In pursuance of this filing, the parties have made written submissions as to whether the court could consider the litigation risk insurance policy obtained by the plaintiffs as an asset within Ontario to which recourse by the defendants in terms of a costs award in their favour could be made in due course.
[8] Counsel for the moving party contends that the litigation risk insurance policy in question cannot be regarded as an asset in Ontario to which the defendants could have access to satisfy a costs award in their favour.
[9] The gist of the moving party’s position is as follows:
The defendants are not parties to the contract and have no standing to enforce the contract. In this regard, the moving party notes that the proceeds of the policy are to be paid to the insured’s lawyer.
Even if the litigation risk insurance policy could be construed as an asset in Ontario, the defendants have no legal right to the proceeds of the policy if payment out under the policy was triggered. Counsel points out that the owner of the policy is the plaintiff and that trial counsel for the plaintiff is merely a recipient of funds that belong to the plaintiff in the event payment out under the policy is triggered. Counsel also contends the fact that the insurer, i.e., the corporation issuing the litigation risk insurance policy is based in Ontario, is irrelevant.
[10] The moving party does not seriously question the merits of the plaintiff’s claims arising out of the motor vehicle accident. In this regard, the moving party has not argued that the plaintiff’s action is “not devoid of merit”; however, the moving party contends that the merits of a non-resident plaintiff’s action though an important consideration, is not an exclusive consideration. Counsel for the moving party argues the question of impecuniosity of a non-resident plaintiff must also be considered concomitantly with the merits of that non-resident plaintiff’s claim.
[11] Counsel for the moving party contends that the plaintiff has failed to discharge her onus and has not put “her best foot forward” to adduce evidence of impecuniosity or that her financial circumstances are such that posting security for costs would effectively stop her action.
[12] In sum, the moving party submits that an order should issue requiring the plaintiff to provide security for costs in the action in the amount of $21,049.87, being $10,497.37 for the defendants Ezzati and Aryaie and $10,552.50 for the defendants Tran and Pham.
The Position of the Plaintiff
[13] The plaintiff submits that the injuries suffered by the plaintiff in the motor vehicle accident support a finding that her claims in the action have “a good chance of success” and in that in such a situation the claims in the action are meritorious and meet this requirement.
[14] The plaintiff seeks to address issues of impecuniosity by noting that the plaintiff has obtained a litigation insurance policy having a face value of $100,000 which even in the event of lack of success or failure at trial to establish her damages will compensate the defendants for any costs that may be incurred. Counsel contends that the defendants are in no danger of suffering any prejudice if their motion for an order for security for costs is denied, and finally that ordering the plaintiff to pay a sum of approximately $21,000 as security for costs into court would unduly prejudice the plaintiff and stop her action.
[15] In support of these positions, the plaintiffs cite the case of Stojanovich v. Bulut, 2011 ONSC 874. In his factum, plaintiff’s counsel refers to dicta from the court (Master Dash) in support of the plaintiff’s contention that the law had developed to give more weight to the merits of the plaintiff’s claim. The following are dicta relied on by the counsel for the plaintiff:
“Where impecuniosity has not been shown, a legitimate factor in deciding whether or not it would be just to require security for costs is whether the claim has a good chance of success...” para. 10, citing Zeitoun v. Economical Insurance Group 2009 ONCA 415, [2009] O.J. 2003 (CA);
and:
“It does not appear that a plaintiff need establish financial hardship in order for the court to take into account in exercising its discretion whether the plaintiff has a good chance of success, however a closer scrutiny of the merits is required.” para. 9, last sentence
[16] In addressing the question of impecuniosity, counsel for the plaintiff refers at length in his written submissions to the litigation risk insurance policy. In responding to the concern raised by the moving party in relation to this litigation risk insurance policy, counsel for the plaintiff contends, among other things, that the policy proceeds are to be paid to counsel for the plaintiff and such counsel will then satisfy any costs award made to the defendants. In this regard, counsel argues that as an officer of the court, counsel for the plaintiff would be required to advance the payment to the defendant for a costs award as ordered by the court but in any event counsel for the plaintiff is willing to undertake to ensure that the payment will not be withheld by counsel for the plaintiff.
[17] Counsel for the plaintiff further argues that the policy is an asset in Ontario as it is written by an Ontario insurer and governed by the laws of Ontario. In the alternative, plaintiff argues that the policy is analogous to an asset in Ontario and fulfils the same purpose, i.e., demonstrating that there are means to satisfy a costs award.
[18] In addressing the potential of the insurer to deny payment upon receiving an adverse costs award against the plaintiff, the plaintiff contends that the court should exercise its broad discretion to dismiss the moving party’s motion for security for costs on the basis there is no “real risk” that the defendants could be left with an unsatisfied costs award.
[19] Counsel argues that if the litigation risk insurance policy were ever suspended, counsel for the plaintiff would undertake to immediately advise counsel for defendants of such fact and thereby enable the defendants to move again for security for costs.
Analysis
[20] There is no real dispute between the parties as to the test for security for costs. It may be simply stated as follows:
On a motion for an order for security for costs, the initial onus is on the party moving for security to show that the other party falls within one of the circumstances for which an order may be made: here the plaintiff ordinarily resides outside Ontario.
The party responding to a motion for security for costs may avoid an order issuing by showing that security is unnecessary because it has sufficient exigible assets in Ontario or that it should be permitted to proceed to trial despite its inability to pay costs.
On a motion for security for costs, the court has a broad discretion in deciding whether security for costs is just in the circumstances. The court will carefully scrutinize the quality and the sufficiency of the plaintiff’s assets and determine whether they are genuine assets.
The merits of the plaintiff’s case is a relevant factor in the exercise of the court’s discretion to make an order for security for costs. If the plaintiff shows a real possibility of success, then the court may conclude in the circumstances of the case, justice demands that he or she not be required to post security.
Impecuniosity in the context of a non-resident plaintiff responding to a motion for security for costs by a defendant includes the inability to raise sufficient funds for the purposes of the litigation. Where impecuniosity is shown the plaintiff to avoid having to post security for costs needs only to demonstrate that his or her claim is not plainly devoid of merit.
A litigant who relies on impecuniosity bears the onus of proof and must do more than adduce some evidence of impecuniosity and must satisfy the court that he or she is genuinely impecunious with full and frank disclosure of his or her financial circumstances. [emphasis added]
The Law of Civil Procedure in Ontario, 2nd Edition, 2014, LexisNexis Canada, pp 826, 827, 820, and cases cited therein.
[21] Counsel for the plaintiff in responding to the motion has placed significant emphasis on the above dicta by Master Dash in the case of Stoyanovich, cited above. As counsel for the moving party has pointed out in paragraph 24 of his reply brief relating to the above arguments for the plaintiff, the decision by the court in not ordering security for costs was not based solely on the merits of the plaintiff’s claim. In paragraph 69 of his reasons, Master Dash makes the following observation:
[69] The defendants have met the first stage of the enquiry under rule 56.01(a). The plaintiff does not ordinarily reside in Ontario. The issue is whether it is just to order security considering all the relevant circumstances, including but not necessarily limited to the plaintiff’s financial situation and the merits of the plaintiff’s case. I have determined that the plaintiff, while not decisively proving impecuniosity, will have financial hardship paying security for costs.
[22] Master Dash then sets out among others, one reason for not requiring the plaintiff to pay security for costs:
(1) It will be financially difficult or impossible for the plaintiff to raise the monies to pay security for costs, particularly in the amounts claimed. [$217,918]
... para. 72, in part.
[23] It is interesting to note Master Dash’s assessment of the plaintiff’s financial situation in his lengthy judgment. It is particularly noteworthy that the plaintiff had provided several affidavits wherein he swears that he is 76 years of age, has been retired for a number of years, has a serious heart condition, has had his financial situation deteriorate in the last few years and he lives on a pension of 670 Euros per month as his sole source of income. He claims to have U.S. $14,000 in a bank in Austria and approximately 1000 Euros in bank accounts in Cyprus. (see para. 43 in Stoyanovich)
[24] Although Master Dash appears to have found with some misgiving that the plaintiff Stoyanovich had financial hardship such that it would be difficult or impossible for him to come up with sufficient assets to pay security for costs in any amount approaching the $217,918 requested, even if payments of such amount were staged, he comes to this conclusion on the following basis:
“...the plaintiff has provided substantial information under oath as to his financial situation and supporting documents. Given the plaintiff’s outline of his meagre income and assets, his sworn affidavit that he owns no other assets and has no other source of income ... I am satisfied that the plaintiff does have financial hardship at this time...”, para. 52, in part.
[25] This analysis by Master Dash in supports the contention of counsel for the moving party that Master Dash did not depart from the established law to establish a new principle that the merit of the claims of the plaintiff would be of primary significance in determining the outcome of a motion for security for costs against a non-resident plaintiff. In his own words in Stoyanovich, Master Dash’s conclusion above, was the result of significant affidavit evidence led by the plaintiff considered in conjunction with the merits of the plaintiff’s claims. In this regard, the contention or argument on behalf of the moving party that the onus on this plaintiff to put her best foot forward in terms of leading evidence to discharge her onus in response to the motion for security for costs is unassailable. As pointed out by counsel for the defendant, there is no affidavit material by the plaintiff and that the only evidence respecting her financial circumstances on the issue of impecuniosity is a statement in an affidavit by her counsel stating that should the court grant an order for security for costs, the plaintiff will suffer undue prejudice and may be unable to continue this action.
[26] I accept the arguments of the moving party in this regard and follow the decisions cited in support of such argument: Pritchard v. Avante Solutions Inc., [2005] O.J. 2718 (Ont. Master); Paulus v. Murray, 2007 CarswellOnt. 1329 (Ont. Master); and Clark v. Tiger Brand Knitting Co., 1986 CarswellOnt. 385 (ONSC).
Conclusion
[27] The plaintiff having failed to discharge her onus on the motion for security for costs, an order for security for costs will issue for the amount claimed $10,497.37.
[28] No submissions were made by either of the parties in the event a security for costs order would issue as to whether payment of the amount of such order should be staged. If deemed appropriate, I am prepared upon written submissions to entertain arguments as to staging of such an order.
Costs Issues
[29] The question of costs shall be dealt with by way of written submissions as follows: not to exceed four pages in length (exclusive of supporting materials), according to the following schedule:
by the moving party within 30 days of the date of this endorsement;
responding submissions by the plaintiff within 14 days of the date of receipt of the moving party’s submissions; and
reply, if any, by the moving party within 10 days of receipt of the plaintiff’s responding submissions.
MacKenzie, J.
Date: August 5, 2015
Amended: August 25, 2015
COURT FILE NO.: CV-14-3239
DATE: 20150805
AMENDED: 20150825
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
SHOKOOFEH YAZDANI
Plaintiff
- and –
BAHAREH EZZATI, ROYA ARYAIE, TUYEN THAN TRAN and VAN S. PHAM
Defendants
ENDORSEMENT
MacKenzie J.
Released: August 5, 2015
Amended: August 25, 2015