Court File and Parties

COURT FILE NO.: CV 15-50 DATE: 2016December13

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Hockeyfest Incorporated Plaintiff – and – Grand River Conservation Authority, Star Security Inc. and Brantford Police Services Board Defendants

Counsel: G. Wrigglesworth, for the Plaintiff M. Swan, for the Defendant, Grand River Conservation Authority M. Cavanaugh, for the Defendant, Star Security Inc. K. Meehan, for the Defendant, Brantford Police Services Board

HEARD: September 20 and 22, 2016

The Honourable Justice R. J. Harper

ISSUES

[1] Motions have been filed by the Defendants, Grand River Conservation Authority, Brantford Police Services and Star Security Inc., pursuant to Rule 56.01 of the Rules of Civil Procedure, requiring the Plaintiff, Hockeyfest Incorporated (Hockeyfest) to post security for costs. They necessitate the following questions:

a. Is the Plaintiff impecunious?

b. If the Plaintiff is impecunious, does the Plaintiff have a “good chance of success after a trial”?

The Plaintiff’s Claims

The Plaintiff’s claims against the three different Defendants are as follows:

i. As against Grand River Conservation Authority: breach of contract/and or the tort of civil conspiracy, and a claim for damages in the amount of $8,000,000.00, $2,000,000.00 in punitive damages and $2,000,000.00 in aggravated and exemplary damages.

ii. As against Brantford Police Services: breach of contract/negligence/negligent misrepresentation, intentional or negligent interference with economic relations, including breach of contract and the tort of conspiracy. Their claim is for $8,000,000.00 in damages, $2,000,000.00 in punitive damages and $2,000,000.00 in aggravated and exemplary damages

iii. As against Star Security: negligent misrepresentation, breach of contract, negligence and breach of fiduciary duties. The claim for damages for the preceding claims is $8,000,000.00, $2,000,000.00 in punitive damages and $2,000,000.00 in aggravated and exemplary damages.

BACKGROUND

[2] The Plaintiff, Hockeyfest, was incorporated without share capital on or about October 14, 2010. The first directors who filed the application for the incorporation were Timothy Johnston, Ralph Spoltore and Anne Veniot. The stated purpose of the corporation was:

a. To promote the game of hockey by organizing and presenting a street hockey tournament with street hockey matches and competitions together with related exhibits, and by establishing and granting prizes, awards and distinction;

b. To promote Canadian music by organizing and presenting a music festival featuring primarily Canadian music artists;

c. To receive and maintain a fund or finds and to apply all or part of the principle and income therefrom, from time to time, to charitable organizations that are registered charities under the Income Tax Act (Canada);

d. And such other complimentary purposes not inconsistent with these objectives.

[3] Beginning in early 2012, the Plaintiff began the process of organizing a music festival in the Brantford area for 2012 (Festival 2012). They had previously organized and presented two music festivals in Brantford in 2010 and 2011. The person mainly responsible for the day to day operations was Ralph Spoltore.

[4] It was projected by Hockeyfest that Festival 2012 was expected to attract between 20,000-30,000 attendees over the three days of the festival.

HOCKEYFEST CONTRACT WITH GRAND RIVER CONSERVATION AUTHORITY

[5] Hockeyfest entered into a written contract, dated March 26, 2012 with the Grand River Conservation Authority (GRCA) for the use of certain lands within the GRCA’s jurisdiction in order to put on Festival 2012. Those lands were commonly known as Brant Park. Festival 2012 would span from June 1, 2012 through June 4, 2012.

[6] Paragraph 6 of the contract sets out certain covenants that Hockeyfest made with GRCA. Most significant to the issues in this motion are paragraphs 6 (d) and (g) and (h) that read as follows:

d. To comply with all federal, provincial and municipal statutes, laws, by-laws, regulations and ordinances as may be applicable to the use of the Event Site and the Conservation Area from time to time.

g. to be responsible for the retention and associated costs for paid-duty police officials to assist with management and control of the Event, and ensure that these paid-duty police officials are present on the site during the following times:

(i) From 5:00 PM June 1st, 2012 to 2:00 AM June 2nd

(ii) From 2:00 PM on June 2nd 2012 to 2:00 AM June 3rd

(iii) From 2:00 PM on June 3rd, 2012 to 2:00 AM on June 4th

h. to be responsible for the retention and associated costs for qualified security staff for the Event, who will be on site at all times during the Term at numbers to be determined in consultation with the Authority.

[7] Paragraph 11 of the contract provided that:

TIME IS OF THE ESSENCE:

Time shall be of the essence of this Agreement and of each of the provisions hereof.

INVOLVEMENT OF BRANTFORD POLICE SERVICES

[8] In order to satisfy its obligations pursuant to paragraph 6(g) of the contract with GRCA, the Plaintiff set a meeting with Brantford Police Services (BPS) on April 10, 2012. Inspector Robert Dinner of BPS was invited to attend that meeting. The purpose of the meeting was to discuss safety and security for the Festival 2012. Inspector Dinner expressed willingness for the BPS to provide “paid duty police officials” for the event as they had provided paid duty police officials for the 2010 and 2011 music festivals.

[9] On May 16, 2012 there was a safety and security meeting. The attendees for that meeting were Inspector Diner, Inspector Wiedrick and Sgt Grahame Lee of the BPS. Also present at the meeting were Jimi Bonotti, Vice President of Star Security (Star) and Ralph Spoltore, one of the Directors of Hockeyfest. All attendees were given a copy of a document that was created by Star Security. This document was filed in the Responding Parties Motion Record at Tab C. The document contained the proposal by Star Security listing what they felt were the necessary requirements for safety and security for Festival 2012.

[10] The proposal, among other things, sets out an outline for certain requirements pertaining to a Fire, Medical Aid and Emergency Plan Protocol. The outline also makes reference to certain Appendices 1-11 that include a Security Plan, Access Control, Emergency Service Route, and Emergency Evacuation Routes. The appendices were not attached to the document and were not filed as an exhibit. In addition, the plan went on to describe the number of guards that would be required for each individual zone that the site was broken into. The number of security guards totalled 110.

[11] An essential term of the contract between GRCA and Hockeyfest was that BPS supply paid duty officials for the Festival. BPS would provide necessary paid duty officials if they were satisfied that the security plan met their requirements. According to BPS, the proposed May 16, 2012 plan would meet their requirements if adopted and formalized.

POSITION OF THE PLAINTIFF

[13] The Position of the Plaintiff is that they have a good chance of success at trial and that Justice demands that there case proceed without the requirement of posting any security for costs.

POSITION OF BPS

[14] BPS takes the position that:

a. Hockeyfest never met their onus to prove that they are impecunious.

b. Hockeyfest’s claims against them for breach of contract are devoid of merit;

c. There was never any written contract between BPS and Hockeyfest;

d. There was never any contract formed by oral agreement or the conduct of the parties as there was never any meeting of the minds on the core issues.

POSITION OF GRCA

[15] GRCA takes the position that:

a. Hockeyfest did not meet the onus to prove that they are impecunious;

b. Hockeyfest’s claims against them for breach of contract are devoid of merit;

c. They entered into a contract with Hockeyfest on March 26, 2012

d. There was a breach of the terms of the contract by Hockeyfest or in the alternative there was an anticipatory breach of the contract by Hockeyfest:

i. Hockeyfest never complied with the terms of the contract set out in paragraph 6(d). They did not comply with fire code regulations despite working with the Fire Department since approximately April 2012. It was apparent that by May 29, 2012, it was impossible for them to comply as the festival was to start just 2 days later;

ii. Hockeyfest did not have the commitment of BPS for paid duty officials by May 29, 2012;

iii. Hockeyfest had not committed to the original security plan that was detailed on May 16, 2012 and agreed to by GRCA, BPS and Star by May 29, 2012. This included a lack of traffic control plan; fire safety plan and, emergency services plan and the number of security guards to be in place.

POSITION OF STAR

[16] Star Security takes the position that:

a. Hockeyfest did not meet the onus to demonstrate that it is impecunious;

b. Hockeyfest’s claims against them for misrepresentation are devoid of merit;

c. They never made any representations to anyone that were not truthful;

d. They specifically never made any misrepresentations to Hockeyfest.

DISCUSSION OF REVISIONS TO THE PLAN

[17] Subsequent to the meeting held on May 16, 2012, Mr Spoltore, created a revised security plan. This revised plan reduced the number of security guards that would be required as set out in the original May 16, 2012 plan by approximately half the numbers agreed to by GRCA and BPS. This revised plan was communicated to BPS and GRCA by Mr. Bonotti of Star Security.

[18] From May 19, 2012 until May 29, 2012 there were a number of meetings and other forms of communication with various combinations of participants. The most significant meetings relevant to the material issues on this motion are summarized below. They include the following:

a. May 16. 2012: Security plan of Star Security presented to representatives of GRCA, BPS and Hockeyfest. This plan was agreed to. Among other things, it required 110 security guards to be put in place on an agreed schedule.

b. May 17, 2012: Spoltore emailed Joe Costantini (Hockeyfest) a revised deployment schedule with a reduced number of security guards.

c. May 19, 2012: Meeting with Joe Costantini (Hockeyfest) and Jimi Bonotti of Star. Meeting to discuss concerns over the May 16, 2012 security plan.

d. May 19, 2012: meeting with Spoltore (Hockeyfest) and BPS to discuss BPS concerns about Hockeyfest’s commitment to the May 16 plan.

e. May 24, 2012: BPS was advised by Bonotti that Hockeyfest was reducing the private security complement by approximately 50%.

f. May 25, 2012: Meeting convened with GRCA, AGGCO, Brantford Fire Department and the mayor. Numerous concerns were expressed. At the end of the meeting BPS advised the attendees that it would not be supporting the event and would not provide pad duty officers.

g. May 26, 2012: Meeting with Spoltore, Bonotti and BPS. BPS advised Spoltore and Bonotti that their position was unchanged and that they would not be supporting the event.

h. May 28 and May 29, 2012: BPS advised Hockeyfest that in order for the BPS to support the event through the provision of duty officers, certain conditions had to be met. The conditions were:

i. The provision of 110 security officers;

ii. A return to the original security plan agreed to on May 16, 2012:

iii. Assurances from Star that the original security plan would be followed and a rollback of security would not happen;

iv. There would be no reduction of Star staff without the consent of BPS;

v. BPS would need to be paid for their paid duty officers up front.

i. May 28, 2012: Chief Nelson of BPS sent an email to Spoltore indicating that BPS would meet with Spoltore and Bonotti on Tuesday May 29, 2012, to formalize the security agreement and accept the certified cheque. Spoltore replied that he would attend at the police station at 9:30 a.m. on May 29, 2012.

j. May 29, 2012: at 7:15 a.m. Bonotti met with BPS and advised that he did not get advanced payment by Hockeyfest and that as a result he would not sign off on the security plan.

k. May 29, 2012: Spoltore attended at BPS without Bonotti (Star) and with an uncertified cheque.

l. May 29, 2012: meeting at GRCA commencing at 2:15 p.m. Spoltore has still not provided a certified cheque to BPS. Brantford Ambulance was not under contract as yet; there was no approved Fires Safety Plan between Brantford Fire and Hockeyfest.

THE LAW

[19] The Rules of Civil Procedure, R.R.O. 1990, Reg. 194, R. 56 provides:

RULE 56 SECURITY FOR COSTS

WHERE AVAILABLE

56.01 (1) 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 Ontario;

(b) the plaintiff or applicant has another proceeding for the same relief pending in Ontario or elsewhere;

(c) the defendant or respondent has an order against the plaintiff or applicant for costs in the same or another proceeding that remain unpaid in whole or in part;

(d) the plaintiff or applicant is a corporation or a nominal plaintiff or applicant, and there is good reason to believe that the plaintiff or applicant has insufficient assets in Ontario to pay the costs of the defendant or respondent;

(e) there is good reason to believe that the action or application is frivolous and vexatious and that the plaintiff or applicant has insufficient assets in Ontario to pay the costs of the defendant or respondent; or

(f) a statute entitles the defendant or respondent to security for costs. R.R.O. 1990, Reg. 194, r. 56.01 (1).

(2) Subrule (1) applies with necessary modifications to a party to a garnishment, interpleader or other issue who is an active claimant and would, if a plaintiff, be liable to give security for costs. R.R.O. 1990, Reg. 194, r. 56.01 (2).

[20] Master Haberman provided a good summary of the law with respect to Security for Costs in Shuter v. Toronto Dominion Bank, 160 ACWS (3d) 58 (ON SC), he stated the following:

The two-part inquiry

The law regarding Rule 56.01 is, for the most part, well settled. In deciding whether or not to order for security for costs, the court must apply a two-step inquiry (see Hallum v. Canadian Chiropractic College (1989) 70 O.R. (2d) 45). The first step requires the moving party, in this case, the bank, to show that it appears that the factor it relies on as the basis for the motion (one of the 6 subheadings under the Rule) exists. The moving party is not required to establish with certainty that this is the case – only that it appears to be. Once it has done that, the moving party has a prima facie right to an order for security for costs. This right, however, can be displaced during the second stage of the inquiry.

Stage one: establishing a prima facie right based on non-payment of cost orders

Subrule 56.01(c) clearly provides that an outstanding cost order may form the basis of a request for security for costs even if that order arises in the context of another proceeding. This is confirmed by case law (see Varma v. Canada Post Corp. [1992] O.J. No. 502).

With respect to subrule 56.01 (d) and 133, it is conceded that the corporation is a shell and that it does not have sufficient assets to pay costs.

Stage two: how the court arrives at an order “that is just” in the circumstances

The motion only proceeds to its second stage if the moving party has fulfilled the stage 1 requirement. Once they have done so, the onus shifts to the responding party, in most cases, the plaintiff. In the second stage, the court must make the order “as is just”. In arriving at the appropriate order, the court must inquire into all factors that have a bearing on the “justice of the case”, including the merits of the case. The end result could be an order that no security is required, notwithstanding that the moving party cleared the first hurdle (see also Horvat et al. v. Feldman et al. (1986), 15 C.P.C. (2d) 220).

It is important, at the second stage of the inquiry, to bear in mind what Rule 56.01 is intended to address. An order for security for costs is consistent with the overall philosophy of our Rules, which emphasises a number of objectives, including streamlining proceedings so that matters move through our courts within a reasonable timeframe; encouraging early and reasonable settlements; and discouraging litigation or steps in litigation that are doomed to fail. As a result, in this jurisdiction, costs generally follow the event - the party whose position fails is generally required to pay a significant portion of the costs of the party who has prevailed. This approach is intended to deter parties from launching frivolous actions, from dragging their heels to court and from initiating unnecessary or unmeritorious steps along the way.

In keeping with this general set of goals, our Rules recognize that this approach to costs provides no such deterrent if a party is unable to pay costs at the end of the

This Rule must be applied carefully, however. One thing it was not intended to do was to bring an end to actions that are well founded in the event that a plaintiff is clearly unable to post security. Further, where it appears that a plaintiff is without funds as a result of the acts of the defendant that have given rise to the litigation, caution must be exercised before ordering the plaintiff to post security if he is without the means to do so. As a result, case law has created an exception from the Rule for the impecunious plaintiff who appears to have a meritorious claim. If a plaintiff can establish that he is truly impecunious and that his claim is not totally devoid of merit, it has been held that the order “that is just” includes one where no security at all need be posted.

In Warren Industrial Feldspar Co. Ltd. v. Union Carbide Canada Ltd. et al., [1986] O.J. No. 2364, Trainor J. made it clear that the onus was on the plaintiff to do two things in order to avoid the application of the Rule:

The case law is unanimous in holding that in order to obtain relief on the basis of impecuniosity, a plaintiff must lead evidence to demonstrate its impecuniosity and to show why justice demands that it be allowed to proceed without posting security for costs, notwithstanding that impecuniosity.

Thus, it is up to a plaintiff who claims he is unable to post security because he is impecunious to establish first, through evidence that he is, in fact, impecunious. Having done that, he must then show that justice demands that his claim be permitted to proceed nonetheless. The latter is usually accomplished by pointing to the merits of the case.

Proving impecuniosity

The first step, demonstrating impecuniosity, involves considerably more than a simple declaration to the effect that one is impecunious. There is a positive obligation on a party claiming to be impecunious to substantiate his claim by way of evidence (see RCVM Enterprises Ltd. v. International Harvester Canada Ltd. (1985), 50 O.R. (2d) 508). This has been defined as showing that a plaintiff is “impoverished or needy” (see Ferguson v. Arctic Transportation Ltd. (1996) 111 F.T.R. 154).

In Pikeathly v. 1059288 Ontario Ltd., Master MacLeod held that a plaintiff earning $45,000 per year did not meet the threshold of establishing that she was impecunious, despite the fact that he was of the view that posting security would be a real hardship for this plaintiff, and might not even be possible, without significant negative impact on her lifestyle. Similarly, the fact that a plaintiff lives below the poverty line will not necessarily establish that he is impecunious (see Mark Doe v. Canada [2005] F.C.J. No. 705).

As the onus to establish an impecunious state rests with the plaintiff, his failure to adduce adequate evidence to that effect will be fatal to his position. Master Hawkins aptly expressed the principle in Tallarico-Robertson v. Communique Group Inc. [2004] O.J. 1648 (upheld [2004] O.J. No. 4175). There, he held that the plaintiff merely expressed a conclusion without supporting financial disclosure when she asserted that she had no material assets or funds to post as security. On that basis, she had failed to establish that she was, indeed, impecunious. He held as well, that the defendant’s failure to cross-examine on her evidence did not “convert insufficient evidence into sufficient evidence”, where the plaintiff had not met her evidentiary onus. Failure to cross-examine did not, in such instance, amount to acceptance of what was asserted.

Similarly, in Pritchard v. Avante Solutions Inc. [2005] O.J. 2718, Master Dash, after examining the evidence tendered to support a finding of “financial hardship” and noting the evidentiary gaps, found against a plaintiff who sought to rely on his precarious financial position to avoid paying security for costs. As he put it:

He does not say exactly what is in his bank account or provide any documentary proof. He does not say whether he has any assets that are not “financial” assets, such as land or other tangible assets upon which funds could be raised to provide security. He baldy claims that “the amounts” sought for security for costs “far exceed the financial resources available to me at the present time.” Again there is no summary of his assets or financial resources, nor does he indicate whether he can borrow or has attempted to borrow in order to post security. Finally, he does not say that if he must post security this action will come to a halt, only that it “may” affect his ability to continue.”

In view of the evidence that was missing, the master was not convinced that he should refrain from ordering security in that case, and therefore proceeded to make the order.

In J.T. Stewart & Associates Inc. v. Cash, Lehman & Associates [2005] O.J. No. 4234, Master MacLeod held that:

In essence full and frank financial disclosure is required to persuade the court that an order for security for costs will necessarily bring the action to a halt. The shareholders have not made that level of disclosure and it is not sufficient to rely on the bald assertions by Ms. Stewart that this will be the result. The moving party did not cross-examine Ms. Stewart but Mr. McEown can hardly be faulted for the strategic decision not to cross-examine on evidence he considered did not discharge the onus. When impecuniosity is relied upon the onus is on the party alleging it to present the necessary evidence”

Finally, in Uribe v. Sanchez [2006] O.J. No. 2370, the court held that as the plaintiff’s financial capabilities are solely within his knowledge, it is incumbent on him to “provide evidence with supporting documentation as to his income, expenses, assets and liabilities” (emphasis added), and that assets should be described with particularity. Here, the master cited Quinn J’s decision in Morton v. HMQ Canada, 75 O.R. (3d) 63, where the learned judge stated that “the financial evidence of the plaintiff must be set out with robust particularity”, leaving “no unanswered questions.” He went on to list what should be included:

Full financial disclosure is required and should include the following: the amount and source of all income; a description of all assets (including value); a list of all liabilities and other significant expenses; and indication of the extent of the ability of the plaintiffs to borrow funds; and details of any assets disposed of or encumbered since the action arose.

It appears from these passages that there is a high evidentiary threshold that must be met before a court can find that a plaintiff is impecunious, and that this threshold can only be reached by tendering complete and accurate disclosure of the plaintiff’s income, assets, expenses, liabilities and borrowing ability, with full supporting documentation for each category where available or an explanation where not available. At the very least, this would require an individual plaintiff to submit his most recent tax return, complete banking records and records attesting to income and expenses, and a corporation to submit its last financial statement and current financial projections.

THE APPLICATION OF THE LAW TO THIS CASE

[21] With respect to the first stage of the analysis, it is not disputed that it appears as if the Plaintiff, a non-profit corporation, does not have sufficient assets to satisfy any judgment. The requirement of r. 56.1(d) has been met.

[22] The second stage of the analysis requires a review of the Plaintiff’s impecuniosity claim and the issue of whether its case is not totally devoid of merit and justice demands that it be allowed to proceed even if the Plaintiff is found to be impecunious.

[23] I agree that there are certain fundamental principles that have been developed in the case law:

a. There must be full and accurate financial disclosure;

b. That disclosure must be of financial documentation of the corporations and its shareholders, if not a publically traded company. At a minimum the disclosure must include:

i. Assets (with reasonable values assigned),

ii. Up to date liabilities,

iii. Evidence of borrowing abilities that are supported by documentation,

1. Production of individual tax returns of the shareholders and complete banking records and records that corroborate income and expenses of the individual shareholders as well as the corporation,

iv. Evidence of what efforts that were made on behalf of the corporation and its shareholders to borrow money.

[24] Financial statements filed by Hockeyfest on two different occasions contain glaring discrepancies that are significant in their implications. The internal numbers shown in the two statements are not consistent.

[25] The first set of financial statements show that Hockeyfest had total assets of $73,037. That was the total at year end for 2012. However, December 2013 statements show that the shareholders took most of the $73,037 for their own benefit.

[26] In addition, the first set of financial statements show that Hockeyfest had revenues of $550,000 and expenses of $580,000. It also showed that it had legal fees of $111,000. The second set of amended financial statements show that expenses were $940,000. This is an increase of $400,000. The legal fees in the amended statement now show at $11,000 and not $111,000. There is no explanation for these significant discrepancies.

[27] I have no confidence that either statement represents accurate or complete statements that properly reflect the financial state of the Plaintiff.

[28] Further, the shareholders provide very little financial disclosure.

a. There is no evidence that any of the shareholders either personally or in conjunction with Hockeyfest made any efforts to borrow money;

b. On the amended financial documents that were filed after Hockeyfest was granted leave, Mr. Tim Johnston provided a personal net worth statement that was prepared on June 1, 2016. That statement set out that his net worth was $62,979. There are no supporting documents filed to corroborate the numbers in the statement. He did not disclose what his income is or the source of any income that he might have;

c. At the same time, Anne Veniot provided a net worth statement showing that she had a net worth of $95,800. She did not provide any supporting documents to her statement. She stated that she was an office manager at a law firm. However she did not disclose her income. She went on to state that she has “some income as a certified mediator”. Once again she has not disclosed that income.

d. Ralph Spoltore filed a net worth statement on that same date. He states that his net worth was at negative $41,743.37. He did not provide supporting documents. He states that he is “currently not employed”. He has not disclosed any source of income. He also has not provided any work or income history. He states that he has a wife and two children.

e. Hockeyfest did not disclose the members of this not for profit corporation.

[29] I find that Hockeyfest has not discharged its burden to show that it has no access to funds to post security for costs. The financial disclosure provided by the corporation cannot be relied upon due to the multiple inconsistencies. Financial statements provided by the Plaintiff’s shareholders is seriously lacking in the detail required as set out in the above noted cases.

[30] In Unique Labeling Inc. v. GCAN Insurance Company, 2009 ONCA 591, the Court of Appeal stated at para 20:

[20] If the corporate plaintiff fails to discharge its evidentiary burden of showing it has no access to funds to post security for costs, Ontario courts do not appear to inquire into the merits of the appeal or consider other factors: see Smith Bus Lines Ltd. v. Bank of Montreal (1987), 61 O.R. (2d) 688, [1987] O.J. No. 1197 (H.C.J.) ("Smith"), at p. 706 O.R.; The Honourable Mr. Justice [page239] Todd L. Archibald and Christian Vernon, "The End of the Action at its Beginning: The Relationship between Security for Costs Motions and the Insolvent Corporate Plaintiff" in The Honourable Mr. Justice Todd L. Archibald and The Honourable Mr. Justice Randall Scott Echlin, eds., Annual Review of Civil Litigation, 2009 (Toronto: Carswell, 2009) (forthcoming), at s. G.6. This approach was specifically not followed by the Manitoba Court of Appeal in ABI Biotechnology Inc. v. Apotex Inc., [1995] M.J. No. 294, 41 C.P.C. (3d) 394 (C.A.), at para. 19, where other relevant factors were considered, such as the merits of the case, the purposes of the application for security for costs, the size and nature of the corporation and the hardships to the plaintiffs if security was ordered. However, in ABI Biotechnology Inc. v. Apotex Inc., [2000] M.J. No. 14, [2000] 3 W.W.R. 217 (Man. C.A.) ("Apotex No. 2"), leave to appeal to S.C.C. refused [2000] S.C.C.A. No. 113, the Manitoba Court of Appeal broke with its earlier decision and adopted the same approach to this issue as the Ontario courts have taken.

THE MERITS

[31] I am of the view that under the circumstances of this case, it is necessary for me to assess the merits of the claim in order to determine if it is just to require the Plaintiff to post the significant security sought by each individual Defendant.

[32] Each Defendants claim for security is as follows:

a. GRCA - $359,628.00

b. BPS - $273,983.35

c. Star Security - $258,435.30

[33] Counsel have agreed that this matter will require a 6-week trial. I have reviewed the outline of costs that are provided by the Defendants’ counsel. All of the costs set out therein are either costs that have already been incurred or costs projected to the completion of trial. The costs set out above are costs calculated on a partial indemnity basis.

[34] The outline of costs consider the factors detailed in the Rules of Civil Procedure, Rule 57.01(1). They are as follows:

a. The amount claimed and the amount recovered in the proceeding

b. The complexity of the proceeding

c. The importance of the issue

d. The conduct of any party that tended to shorten of to lengthen the duration of the proceeding

e. Whether any step in the proceeding was proper, vexatious or unnecessary or taken through negligence, mistake or excessive caution

f. A party’s denial or refusal to admit anything that should have been admitted

g. The experience of the party’s lawyer

h. Hours spent, the rates sought for costs and the rate actually charged by the party’s lawyer.

[35] Many of the outlined costs are projections needed to complete this matter. I find that the costs incurred this far by all Defendants, and the costs projected, are reasonable. This matter is complex and involves multiple Defendants. There have been extensive discoveries. The Defendants had to bring a motion to produce some of the undertakings. There were amendments to the Plaintiff’s proceedings. The hourly rates set out by all counsel are reasonable given their expertise and experience at the bar. I find that the amounts claimed for security for costs are reasonable.

[36] I find that the claims by Hockeyfest against all of the Defendants have very little chance of success for the reasons set out below.

MERITS GRCA

[37] I find that Hockeyfest was not in compliance with the material terms of the March 12, 2012 contract with GRCA. This should have been completed by May 29, 2012. I find that it was reasonable for GRCA to anticipate that Hockeyfest could not comply. The festival was to start on June 1, 2012. Hockeyfest had been working with fire and safety plans since April 2012 and was still not in compliance less than 2 days from the start of the festival.

[38] The original security plan was agreed to by BPS and GRCA on May 16, 2016. Hockeyfest then took a number of steps that caused it to be the author of its own misfortune. Some of those steps included:

a. On March 19, 2012, Ralph Spoltore created a revised plan that significantly altered the number of security guards required. This was communicated to Star who relayed that information on to GRCA and BPS. BPS was not satisfied with any alteration to the original plan.

b. BPS met with Hockeyfest on more than one occasion after they became aware of the revised plan. BPS made it clear that they would not accept alterations to the plan presented on May 16, 2012.

c. BPS had a meeting with Hockeyfest on May 25 and May 28, 2012. Consistent with both meetings, BPS stated that they would participate in providing the needed paid Duty Officials. The following terms were agreed to:

i. Hockeyfest provided a certified cheque for he paid duty officials payable to BPS in the amount of $15,000.

ii. The original plan of May 16, 2012 was agreed to;

iii. That if there were to be any alterations to the plan the alterations must be agreed to by BPS.

iv. Star Security was the only security company and they must sign off on the security plan.

[39] If the above terms were all met BPS indicate that they would support the festival.

[40] I find that all of the terms as set out above were not complied with for the following reasons:

a. Ralph Spoltore set up the time that he would meet at BPS on May 25, 2012 at 9:30 a.m. He was to provide a certified cheque in the amount of $15,000. He attended at BPS, however, he did not have a certified cheque. He claimed that he could not certify it as the banks were not open yet. I find that is not acceptable. He is the one who set the time that he would show up with the certified cheque and he failed to do that.

b. In addition, that same morning. Star Security had not guaranteed that it would sign off on the security plan as it was not given a guarantee that their money was available for all two days.

c. GRCA had advised BPS that it was no longer supported the event. GRCA stated that there were too many safety and security issues that remained outstanding by May 28, 2012. GRCA represented that it would not alter its position until it saw what happened with BPS. At a meeting on May 29, 2012, with GRCA, BPS, Star Security and other stakeholders such as OPP, Fire, Emergency Services, it was determined that Hockeyfest had not complied with the fire code, traffic planning, emergency services and most importantly, Star Security had not signed off on the security plan. It was at this meeting that GRCA and BPS concluded that they would no longer support the concert.

[41] On the evidence before me, I find that there was no contract between BPS and Hockeyfest. BPS offered to participate if certain pre-requisites were put into place by Hockeyfest. Those pre-requisites were not met. Hockeyfest did not provide a certified cheque at the agreed upon time. Hockeyfest did not secure the commitment of Star within a reasonable time frame.

[42] In my view, the contract between Hockeyfest and GRCA was not complied with within a reasonable time. The contract provided that time was of the essence and despite that provision, major gaps in the security plan remained outstanding less than 2 days prior the event start. The lack of fire code compliance is a direct infringement of Clause 6(d) of their contract.

[43] The BPS’s refusal to continue to support the event also placed Hockeyfest in non-compliance with their contractual provision with GRCA to have BPS supply paid duty officers for the event. I find that lack of compliance was a direct result of Hockeyfest’s own actions or inactions by not acting expeditiously and securing the commitment of Star Security, BPS, and all other safety and security stakeholders that were required in order to put the event on safely.

STAR SECURITY

[44] The claim against Star is based on misrepresentations that were allegedly made by Star. I find that Star did not make any misrepresentations of fact to Hockeyfest that Hockeyfest relied on to its detriment. I also find that there were no representations made by Star to BPS and to GRCA that were not truthful.

[45] The claimed false representations are:

a. Star stated that Hockeyfest was lowering the number of security guards that were agreed to in the original plan.

b. Hockeyfest was bringing in another security company.

[46] Both of the above allegations are not supported by the evidence. Hockeyfest did submit a revised security plan on May 19, 2012 in an attempt to lower their costs. I find that it was appropriate for Star to relay that information on to GRCA and BPS.

[47] In addition, Mr. Spoltore admitted in his cross-examination that he had approached another security company. He even named a company called Millennium. He stated that he felt that he had no option at that time to make such an approach considering the positions that were being advanced with respect to certain safety and security issues. I find that there were no facts related by Star that were untruthful. Hockeyfest’s action against Star has little to no chance of success.

[48] I therefore allow all motions for the Plaintiff to post security for costs in the amounts requested.

[49] The Plaintiff shall post security for costs as follows:

a. To the credit of GRCA $359,628.00

b. To the credit of BPS $273,983.35

c. To the credit of Star $258,435.30

[50] The Plaintiff cannot take any further steps in these proceedings until the costs set out above have been paid.

[51] If Hockeyfest does not post the above securities within 30 days, the Defendants may move for dismissal of Hockeyfest’s claim.

R. J. Harper

Released: December 13, 2016