Court File and Parties
COURT FILE NO.: CV-15-535613
MOTION HEARD: 2016-07-12
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: SCIQUEST, INC., Plaintiff
AND
JON W. HANSEN and HANSEN CONSULTING AND SEMINARS INC., Defendants
BEFORE: Master Lou Ann M. Pope
COUNSEL: Counsel for plaintiff: Christopher Selby, Cassels Brock & Blackwell LLP Fax: 416-642-7127
Counsel for defendants: J. Alden Christian, McBride Bond Christian LLP Fax: 613-233-8868
REASONS FOR ENDORSEMENT
[1] The plaintiff seeks an order striking the statement of defence of the defendant, Jon W. Hansen (“defendant”), pursuant to rule 57.03(2) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, as amended (“Rules”) on the ground that the defendant has refused or neglected to pay the cost order made by Lederman J. made on March 14, 2015.
[2] The defendant opposed this motion on the basis that he was unable to pay the costs order by the 30-day deadline ordered by Justice Lederman.
[3] The plaintiff has pleaded that 18 blog posts or articles written by the defendant and published in Ontario, other parts of Canada and elsewhere contained defamatory statements which have caused damage to the plaintiff’s reputation in Ontario, Canada and elsewhere. (Sciquest Inc. v. Hansen et al., 2016 ONSC 1488, at paragraph 2)
[4] The defendant defended the action on the basis that he wrote the impugned articles in good faith and in the belief that the news reported in them was true. He has pled numerous defences in response to the defamation claims, including truth or justification, fair comment, responsible communication on matters of public interest and qualified privilege afforded to journalists and bloggers.
[5] The background to this action is as set out by Lederman J. in his decision dated March 14, 2016, at paragraphs 2 to 5, as follows:
Sciquest is incorporated in the State of Delaware and its head office is located in North Carolina. It has offices in various places in the world including Edmonton, Alberta. Sciquest is a provider of “cloud-based” business automation software which is used by customers to manage spending, suppliers, contracts, sourcing, shopping, inventory and accounts payable more efficiently to improve their financial results.
Hansen is a journalist and speaker, focused primarily on the procurement industry. He resides and has continuously resided since May, 2008 in the Province of Quebec.
Since May, 2007, Hansen has been writing an internet blog entitled “Procurement Insights” reporting on the activities and business interests associated with the procurement industry. His blog, which is accessible on the internet, is found on WordPress.com website located in San Francisco, California and Ireland, and is also accessible through Twitter feeds.
[6] The defendant brought a motion for an order staying this action on the basis that the Ontario Superior Court of Justice does not have jurisdiction over this action or alternatively, that another forum is more convenient for the trial of this action. Lederman J. heard the motion on February 29, 2016. In dismissing the motion, he found that the defendant failed to demonstrate that any proposed alternative forum is clearly more preferred or appropriate and that no other forum exists that is in a better position to dispose fairly and efficiently of the litigation.
[7] Lederman J. ordered the defendant to pay the plaintiff’s costs of the motion which were fixed in the “agreed amount” of $22,000, all inclusive payable within 30 days of March 14, 2016, the date the decision was released.
[8] It is not in dispute that the defendant has not paid the costs order or any portion of it to date.
[9] The defendant filed two affidavits in opposition to this motion. Only three paragraphs in the two affidavits relate to the costs order. His evidence is that he has “not been unable to pay the award for costs by the deadline established . . . .” He states further that he is the sole income earner in his family which consists of himself, his spouse and four children. He earns between $80,000 and $90,000 a year. He rents his house, owns no real estate and has no RRSPs or other investments. Lastly, he makes his living solely as a blogger and motivational speaker. That is the sole extent of his evidence to substantiate his statement in paragraph two of his affidavit sworn May 30, 2016 that he has not been able to pay the costs award “by the deadline established”. This statement suggests, in my view, that he may be able to pay the costs order if he had more time. This point will be addressed in more detail later in this decision.
[10] Rule 57.03 relates to costs of a motion and failure to pay. Subrule (a) provides that on the hearing of a contested motion, unless the court is satisfied that a different order would be more just, the court shall (a) fix the costs of the motion and order them to be paid within 30 days; or (b) in an exceptional case, refer the costs of the motion for assessment under Rule 58 and order them to be paid within 30 days after assessment.
[11] Subrule (2) provides that where a party fails to pay the costs of a motion as required under subrule (1), the court may dismiss or stay the party’s proceeding, strike out the party’s defence or make such other order as is just.
[12] Rule 60.12 is the general rule regarding failure to comply with an interlocutory order. It provides that where a party fails to comply with an interlocutory order, the court may in addition to any other sanction provided by the rules, stay the party’s proceeding, dismiss the party’s proceeding or make such other order as is just.
[13] It is clear from those rules that the court has discretion where a party fails to comply with a costs order or interlocutory order to, in the case of a plaintiff, dismiss or stay the action; in the case of a defendant, strike the statement of defence, and with respect to both parties, make such other order as is just.
[14] Dunphy J. in Rana v. Unifund Assurance Co., 2016 ONSC 2502, at paragraph 50, summarized the principles that are relevant guides to the exercise of court discretion under the above-noted rules, as follows:
a. Where there has been non-compliance with an order of the court, the court should be alive to the possibility that its process is being abused; failing to act may deprive the moving party of justice according to law and risks rendering the court a paper tiger;
b. The right of access to the courts must be accompanied by the responsibility to abide by the rules of civil procedure and to comply with orders of the court – to exempt impecunious parties from the enforcement of costs orders when made would amount to granting cart blanche to continue to ignore the rules and orders of the court and take unsupportable steps in the action without fear of consequences;
c. The court ought not to sit in appeal of the prior costs awards – the respondent will have had the opportunity to make submissions about impecuniosity at the prior hearings that resulted in the costs orders and seeking to relieve against prior costs orders constitutes a collateral attach on orders previously made;
d. The court may have regard to a pattern of unnecessary and unreasonable steps taken in the proceeding, including appealing numerous orders without chance of success or knowing the risk thereby imposing costs upon the other party;
e. If the orders of the court are cavalierly ignored and if a litigant continuously fails to comply with her obligations as a litigant then fails to abide by the costs consequences attendant upon that behaviour, the court is justified in bringing some finality to the action;
f. Impecuniosity is not a shield for unreasonable conduct of litigation and a dismissal order may be made even if it resolves the matter on procedural rather than substantive grounds;
g. Self-represented litigants, while entitled to some accommodation and assistance to ensure a fair hearing, are not entitled to abuse the system or the party opposite and failure to enforce orders once made against self-represented parties is unfair to the parties opposite and undermines respect for the court and the civil justice system;
h. Courts usually talk in terms of prejudice that cannot be compensated for by costs. But, at some point, costs themselves become an inadequate form of compensation for prejudice, especially where the party on whom they are imposed refuses to pay them.
[15] The plaintiff submits that the court ought to consider several facts, including the following:
- the costs order resulted from an unsuccessful motion brought by the defendant to challenge the jurisdiction of this court;
- the parties agreed on the quantum of the cost order of $22,000;
- the defendant made no submissions to Lederman J. relative to his inability to pay a costs order;
- there is no evidence from the defendant of any intention to pay the costs order.
[16] The plaintiff submits that by bringing the motion to stay the action, the defendant assumed the risk of losing the motion and being required to pay costs. It is further submitted that if the costs order is not enforced, it would be unfair for the plaintiff to have to incur costs of any motion brought by the defendant in the future when he has not paid prior costs orders.
[17] An evidentiary issue arose when Mr. Christian, counsel for the defendant, made his submissions and proceeded to make statements regarding the defendant’s ability to pay the costs order, which were obviously contrary to the rules of evidence. Mr. Christian was cautioned that it was open to the defendant to put his evidence before the court in proper affidavit form regarding his purported willingness to pay the costs order; however, he failed to do so. As such, Mr. Christian’s statements are not evidence that are properly before this court and will not be considered in reaching a decision. Mr. Christian was allowed to proceed. He affirmed that the defendant is not taking the position that he is impecunious, but that he does not earn sufficient income to pay the order in one lump sum considering his tax deductions and having to support his family. In addition, Mr. Christian advised the court that it is not the defendant’s intention not to pay the costs order and that he fully understands his obligation to do so. Mr. Christian advised that the defendant could pay the costs order over time in small payments of $500 to $750 per month.
[18] Mr. Selby, counsel for the plaintiff, acknowledged that settlement discussions were held regarding payment of the costs order; however, he points out that, despite Mr. Christian’s suggestion that the defendant could make periodic payments, the defendant has not made any payments toward the costs order which, it is submitted, demonstrates that the defendant has no intention to pay.
[19] The plaintiff relied on several cases that recently dealt with the issue herein including the case of Rana referred to above. In all of the cases, the plaintiffs were self-represented and the defendants brought motions to dismiss the actions on the grounds that the plaintiffs had failed to pay prior costs orders or interlocutory orders. Unlike the action herein where the defendant has failed to pay one cost order, in the cases relied on by the plaintiff, the plaintiffs had failed to pay numerous costs orders. In other words, in those cases, there was repeated non-compliance and abuse of the court process. This, the defendant submits, is a factor in his favour which supports his submission that he ought to be granted a last chance to pay the cost order.
Analysis
[20] The defendant is not self-represented unlike all of the cases relief on by the plaintiff. Therefore, it must be presumed that he had proper legal advice regarding the risk inherent in bringing his motion to stay the action, as well as his obligation to pay any resulting cost order.
[21] Counsel had settlement discussions regarding payment of the costs order; however, the defendant has not made any payment, even nominally, in good faith to demonstrate his counsel’s statement that the defendant has every intention to comply with his obligation.
[22] Although I find that the defendant has offered an acceptable explanation for non-payment of the full award, he has failed by his conduct to demonstrate his purported intention to pay the costs order. Therefore, given that the defendant chose not to put before this court his purported good intention, I make an inference against the defendant in that respect. In the factual matrix as exists in this action and on this motion, in my view, it was incumbent on the defendant to put his best foot forward which he failed to do.
[23] I also find that the defendant failed to put his best foot forward on this motion by not making any proposal for payment of the costs order, nor did he give any evidence regarding his ability to borrow the money to pay the order in the 30-day timeline. Further, he offered no explanation for agreeing to the quantum of costs while at the same time being silent regarding his alleged inability to pay the costs order immediately. He offered no explanation for not having made any payment whatsoever toward the costs order despite his lawyer suggesting that he could pay $500 to $750 monthly until payment is made in full. Lastly, there is no evidence that he made any attempt to comply with the costs order until the plaintiff brought this motion.
[24] The defendant had the opportunity to make submissions before Lederman J. regarding his ability to pay any costs order and did not do so. Had he done so, this motion would likely not have been necessary as Lederman J. would have been in a position to assess the issue and, if necessary, order that the defendant file evidence regarding his inability to pay a costs order. In that respect, the defendant has forced the plaintiff to incur unnecessary costs by bringing this motion. For those reasons, it is my view that the defendant has abused the court process.
[25] However, there is one fact that militates in favour of the defendant; that is, there is no pattern to date of the defendant having ignored court orders as this is the first and only costs order that he has not paid. The fact that the defendant challenged this court’s jurisdiction over this action cannot be said to have been frivolous or vexatious. Lederman J. clearly did not make such a finding. He found that the defendant failed to demonstrate that any proposed alternative forum was clearly more preferred or appropriate and that no other forum existed that was in a better position to dispose fairly and efficiently of the litigation. For those reasons and in the circumstances herein, I find that to strike the statement of defence at this time would be too harsh a remedy.
[26] On a motion brought pursuant to subrule 57.03(2), the court has discretion to strike the statement of defence herein or make such “other order” as is just. Given that the defendant did not make submissions to Lederman J. regarding terms of payment and based on the evidence filed, it is just in the circumstances to grant the defendant one last chance to comply with the costs order. Therefore, the defendant shall pay the costs order by way of monthly payments of $650 commencing August 1, 2016 until it is paid in full which will take just under three years. If the defendant defaults in payment at any time, the plaintiff is at liberty to bring a motion to strike the defence, on notice to the defendant.
[27] Although the plaintiff was not successful on this motion to strike the statement of defence, for the reasons stated above, the defendant’s failure to pay necessitated this motion and unnecessary costs to the plaintiff. In the circumstances, I am of the view that it is fair and reasonable that the plaintiff be entitled to its costs of the motion. Therefore, the defendant shall pay the plaintiff’s costs of this motion payable in any event of the cause in an amount to be agreed upon or fixed by this court if the parties cannot agree on the quantum. If the parties cannot agree on the quantum of costs, the parties shall deliver costs outlines within 14 days of this order to be directed to my assistant trial coordinator, Ms. C. Meditskos.
_(original signed) ____ Master Lou Ann M. Pope
July 13, 2016