Court File and Parties
COURT FILE NO.: CV-12-444239 DATE: 2017/03/10 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: GOLDMAN and SEUNATH, Plaintiffs/Responding Party AND: POWERS, Defendant/Moving Party
BEFORE: MASTER RONNA M. BROTT
COUNSEL: Aaron Goldman, Self-represented Plaintiff Fax: 877-327-3139 A. Melfi, for the Defendant Fax: (416)865-6636
HEARD: July 23, 2015; October 22, 2015; November 30, 2015; January 20, 2016, July 7, 2016 and October 31, 2016
Endorsement
[1] The defendant seeks an Order that the plaintiff, Aaron Goldman (“Goldman”) be required to post security for costs.
[2] In August 2009 the defendant solicitor, Joseph Powers (“Powers”), represented the plaintiff, Aaron Goldman (“Goldman”), with respect to a motion in which Goldman sought to be added as a party to matrimonial litigation between Naila Seunath (“Seunath”) and Sean Singh (“Singh”). Seunath was then the fiancée of Goldman. The Goldman motion was dismissed. Thereafter, on September 3, 2009, Seunath retained Powers to represent her in the matrimonial litigation. On October 26, 2009, during the course of the matrimonial trial, Minutes of Settlement were executed. They provided for a divorce between Seunath and Singh and custody and access between them for their child Matthew Singh. The Minutes of Settlement also provided that Goldman would have no access or contact with Matthew. In January 2010 Powers removed himself as solicitor of record for Seunath in the matrimonial litigation.
[3] This professional negligence action was commenced by Notice of Action on January 17, 2012. Goldman and Seunath seek damages of $25,000,000.00 for; inter alia, negligence, defamation, fraud, interference with contractual relations and conspiracy. The Statement of Claim was filed on February 16, 2012. A Statement of Defence was delivered on or about November 14, 2013. On or about June 25, 2014, Seunath’s counsel attempted to file a Notice of Discontinuance of this action without the consent of the defendant. Goldman paid costs of $5000.00 to Powers in exchange for the filing of the Notice of Discontinuance of this action on behalf of Ms. Seunath.
[4] Goldman and Powers exchanged Affidavits of Documents in 2015. This motion was initially returnable July 23, 2015. It was adjourned on consent to October 22, 2015. On that date, the parties appeared and the plaintiff requested an adjournment to file additional evidence. The motion was adjourned to January 20, 2016. There was also an attendance on November 30, 2015 when the defendant requested and was granted permission to deliver supplementary materials. On January 20, 2016 Goldman filed an additional affidavit in support of a request for a further adjournment. An adjournment to July 7, 2016 was granted on terms. On July 7, 2016 this hearing on its merits was delayed when the plaintiff sought to strike the affidavits filed in support of the motion. The preliminary motion to strike was dismissed and this motion was argued. Concluding submissions were heard on October 31, 2016.
[5] In support of this motion the defendant relied on two affidavits of Jennifer Forgie, law clerk, sworn May 8, 2015 (31 paragraphs) and January 4, 2016 (19 paragraphs). The plaintiff relied on his own sworn affidavits dated February 17, 2015 (174 paragraphs), August 18, 2015 (92 paragraphs), October 19, 2105 (56 paragraphs), December 28, 2015 (293 paragraphs), January 18, 2016 (6 paragraphs), January 18, 2016 (6 paragraphs) and May 18, 2016 (5 paragraphs). As well, he relied on a dozen additional affidavits of friends, colleagues and others with knowledge, information and/or belief about the circumstances surrounding Goldman, Seunath and/or the matrimonial litigation. Also filed was a transcript of a taped recording of a conversation between Joseph Powers and Wendy Starr taken November 19, 2009.
Law
[6] Rule 56.01(1) of the Rules of Civil Procedure provides that the court may make such order for security for costs as is just where, among other grounds, it appears that:
(a) The plaintiff is ordinarily resident outside Ontario.
[7] Rule 56.01(1) requires a two-step analysis. First, the defendants have the onus of satisfying the court that it appears that the matter comes within one of the six categories enumerated in Rule 56.01(1). At the second stage, the onus shifts to the plaintiff to establish that an order for security would be unjust. The second stage requires an inquiry into a number of factors which may assist the court in determining if the order is just.
Rule 56.01(1)(a) – Ordinary Residence Outside Ontario
[8] Goldman admits that he is ordinarily resident outside of Ontario. In Goldman’s sworn affidavits of August 18, 2015 and December 29, 2015, he swears that he is “of the City of Winnipeg in the Province of Manitoba”. Based on this undisputed evidence, I am satisfied that the defendant has satisfied his onus to prove, on the balance of probabilities, that the plaintiff is ordinarily resident outside of Ontario.
"As is Just"
[9] Having established the first part of the test, the onus shifts to the plaintiff. Goldman submits that as he is impecunious, an order for security for costs would not be just. As stated by Justice Brown in Shibish v Sher, 2015 ONSC 1844, “The term “impecuniosity” does not appear in Rule 56, but is a judicial gloss on the rule in response to the words “as is just”. When a plaintiff seeks to rely on impecuniosity, the onus falls on him or her to demonstrate that impecuniosity exists on a balance of probabilities. The evidentiary threshold is high, and “bald statements unsupported by detail” are not sufficient. The 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.” Coastline Corp. v Canaccord Capital Corp., 2009 CarswellOnt 2312; Uribe v Sanchez, [2006] O.J. No. 2370; Shuter v Toronto Dominion Bank, , [2007] O.J. No. 3435; Hamayoon et al. v Bordbar et al., 2010 ONSC 1968; O’Neil v Le Roux, 2011 CarswellOnt 5623.
[10] It is the responsibility of the court, in the exercise of its discretion of the determination of whether an order for security is just, to balance the interests of the parties. This requires a review of the plaintiff’s financial circumstances and the possible effect that the claim might not be able to proceed, should an order for security be made.
Impecuniosity
[11] The plaintiff must set out financial evidence with robust particularity. In the plaintiff’s affidavit sworn August 18, 2015, he purports to provide an outline of his financial position. It includes a TD bank balance, a 2013 Judgment obtained by RBC against Goldman, and various loan agreements which Goldman asserts he guaranteed. Goldman subsequently filed income tax returns for the years 2012 – 2014, a statement of assets and liabilities (without supporting documentation), profit and loss statements and balance sheets for “his” company, Masterworks 2011 TV Inc. (“Masterworks”).
[12] Goldman asserts that he has a minimal annual income. His tax returns reveal income as follows:
2012 - $ 5,000.00 2013 - $11,500.00 2014 - $11,500.00
Although not clear from his evidence, it would appear that his 2013 and 2014 income is from Masterworks, as noted on the Masterworks balance sheet as “owner’s draw”. The 2014 Masterworks balance sheet also shows as an expense, payment of $34,364.10 “to AG”, which the defendant asserts is to Aaron Goldman. The draw and the payment to AG clearly adds up to more than the $11,500.00 income figure on the 2014 return.
[13] On the Statement of Assets and Liabilities, the plaintiff projects cash income of $15,000.00 in 2016, book income from TV producing in the amount of $6 million and a monthly projected invoicing for TV shows in the amount of $500,000.00 through an undescribed entity, “Symphonic Vision”. The evidence is silent on any explanation of how he expects to invoice $6 million for TV production matters yet not earn any income.
[14] On the 2013 and 2014 Masterworks balance sheets, there are line items under “Other Current Liabilities” that reference “loan from AG” (again, the defendant alleges AG is Aaron Goldman). In 2013 the loan from AG was $70,224.00 and in 2014 the loan from AG was in the amount of $174,241.36. It would accordingly appear that Goldman earns more income than his income tax returns reveal.
[15] Although the snapshot of his chequing account in July 2015 shows zero dollars, there is no information about the amount of money in the account either before or after 2015.
[16] Reviewing his borrowing ability, Mr. Goldman’s August 2015 affidavit annexed a copy of a TD credit card statement showing a balance of $11,710.76. The photocopy of the statement is undated and fails to show when the amount was incurred. There is no evidence of any attempts made by the plaintiff to secure additional credit from his bank or any financial institution. As noted above, it appears that he has been able to “borrow” from Masterworks. As well, Freedom TV, which is another of Goldman’s companies, appears to have received $1,033,051.50 from Masterworks in 2014. There are no documents setting out what he owes to the various people and/or companies.
[17] The plaintiff’s affidavits also refer to monies advanced to him by his mother. In the December 2015 affidavit, Goldman states that he continues to borrow from his mother and to use his mother’s credit card. The funds were apparently used to pay for medical reports from Dr. Bruto, to update computer software and to purchase a printer. His mother used to live in New York State but over the course of the various dates of this hearing, the plaintiff moved her to Winnipeg. It is unknown whether her home in New York was sold and if so, who benefitted from that sale. Information and documentation regarding his mother’s funds was absent from the evidence.
[18] In his August 18, 2015 affidavit, Goldman states that he and Masterworks have guaranteed four high-interest loans from a Quebec-based finance company known as R & D Capitals. In his Statement of assets and liabilities, Goldman estimates liabilities of $1,200,000.00 to R & D Capitals. There are loan and credit agreements with four companies (WWS Inc., RTZZ Inc., DPI Inc. and MFP Pictures Inc.) but the relationship between Goldman and these companies is vague. He states that he is the primary supplier of production services yet the evidence is silent as to what amounts he is compensated for the work. If he does supply services, the income from these does not appear in the financial documentation produced. There is also no evidence of the benefit(s) that he receives as guarantor of the loans, nor is there evidence of the current status of the loans.
[19] One further factor on the issue of impecuniosity is in relation to the costs agreed upon when Seunath discontinued this action. Goldman concedes that he paid the $5000.00 costs to Powers on behalf of Seunath in order that the Seunath Discontinuance of the action could be finalized.
[20] The plaintiff submits that the defendant has failed to put forth satisfactory evidence to rebut his impecuniosity. It is his further submission that had the defendant conducted a cross-examination, he could have answered questions and provided all necessary documents. Justice Brown at paragraph [24] of Shibish v Sher, supra, relying on Talarico-Robertson v Communiqué Group Inc., [2004] O.J. No. 1648, states “The plaintiff’s case is not assisted by the failure of the defendant to cross-examine him or her.” The test on a security for costs motion requires the plaintiff to meet the burden of establishing impecuniosity. It is not the defendant’s responsibility to rebut the evidence nor to disprove impecuniosity. As there are many material questions which remain unanswered in relation to the plaintiff’s financial situation, I find that although he has demonstrated some financial hardship, he has failed to satisfy the high threshold required to establish impecuniosity.
Merits of the Action
[21] The merits of an action play a role under Rule 56.01(1), but the courts have determined that they must be assessed on a continuum. Caselaw is clear that where impecuniosity is shown, the plaintiff need only demonstrate that the claim is not plainly devoid of merit. If on the other hand impecuniosity is not found, then the plaintiff must demonstrate, with a closer scrutiny of the merits, that the claim has a good chance of success. In the exercise of its discretion, the court must look to the pleadings, the evidence and other relevant facts.
[22] The plaintiff alleges that an order for security would deprive him of asserting his causes of action. Because there has not been a finding of impecuniosity, it is incumbent upon him to demonstrate that his claim has a good chance of success.
[23] The Statement of Claim seeks damages against the plaintiff’s former solicitor for breach of duty of care, negligence, breach of statutory duty, defamation, libel, fraud, deceit, interference with contractual relations, conspiracy and intentional infliction of emotional harm. The claim is based on Powers’ retainer by Seunath in September 2009 to act on her behalf with respect to matrimonial litigation with her ex-husband. After three weeks of trial, the litigation settled. Basically, Goldman alleges that Powers failed to properly represent Seunath at the trial, and as a result, she suffered mental, physical and emotional issues.
[24] Significantly, Seunath delivered both a Release and a Notice of Discontinuance of the action so currently it is only Goldman who is a plaintiff. As the majority of the claims relate to Seunath, I find that Goldman does not have a good or reasonable prospect of success.
[25] The defendant has raised a limitations defence, alleging that because the claim was commenced more than two years after the day when the claim was discovered, it is statute-barred. The matrimonial litigation was settled on October 26, 2009 and this action was commenced on January 17, 2012.
[26] By email dated November 11, 2009 Seunath wrote to Goldman that she “does not want to go back into court at all”. She stated: “I thought you were doing these things re: Powers. I did not know it was me having to do them”. As well, attached to Goldman’s February 17, 2015 affidavit, is an email from Goldman to Susan Georgopolous dated November 22, 2009 in which he asks her to prepare a response to Power’s affidavit in support of Power’s motion to remove himself as solicitor of record in which he states: “I think it would be great for you to include as much as you can about the harmful effects of Powers’ early advice on Naila and Matthew prior to and during the trial, any awareness you have of him continuing to slander me to Naila prior to and during the trial, and all of your awareness of his threats to Naila and other pressure tactics relating to finances for the trial.” These examples evidence Goldman discussing the possible issues relating to Powers’ alleged negligence and defamation as early as November 2009.
[27] Goldman relies on s. 7 of the Limitations Act and submits that the action is not statute-barred due to his on-going cognitive issues which he allegedly began to experience following his involvement in a motor vehicle accident that occurred in February 2008. He relies on various medical reports filed on this motion in support of his alleged inability to appreciate that he had a claim as of 2009.
[28] Goldman has commenced numerous lawsuits in various jurisdictions arising from the events leading up to and stemming from the matrimonial litigation. In one action that was commenced in 2011 by Goldman and Seunath against Jeffrey Weinberg and Oak Ridges Medical Clinic, the plaintiffs claimed for damages in the amount of $25,000,000.00 for inter alia, breach of the duty of care, breach of statutory duty, negligence, defamation, fraud and conspiracy. These are identical causes of action as in the within action. The plaintiffs alleged that Mr. Weinberg had failed to adequately record a disclosure by Matthew in relation to alleged abuse by his father Sean Singh against him.
[29] Justice Myers heard a summary judgment motion in that action on April 24, 2015 and held that the primary issue to be dealt with was whether Goldman was incapable of commencing the claim within the limitation period because of a physical, mental or psychological condition. Justice Myers accepted that Goldman had memory issues but rejected the plaintiff’s submissions that he lacked capacity to start a lawsuit from July 2009 – July 2011 and he dismissed the plaintiffs’ action on the basis that it was statute-barred. The appeal of Justice Myers decision was administratively dismissed.
[30] The only additional medical evidence filed on this motion, as compared to what was before Justice Myers, are the reports from Dr. Bruto, Clinical Neuropsychologist, dated December 15, 2015 and February 26, 2016. Goldman retained Dr. Bruto in November 2015 to prepare a medical-legal report for use on this motion. The first report is based solely on one telephone interview with Goldman which was conducted between the time she was retained and the date of the report. She reviewed various interdisciplinary reports, and a neuropsychology consultation report of an assessment completed on November 27, 28 and December 3, 2008. She did not have access to the raw data from any of the neuropsychology/psychology assessments. Dr. Bruto did not assess Goldman nor did she ever even meet him between 2009 and 2015. Her report includes Goldman’s comments to her regarding his current inability to perform tasks. The second report includes a review of various affidavits of Goldman’s friends and colleagues (many of the same ones as filed on this motion), as well as an in-person interview with Goldman on January 19, 2016, without a clinical examination. Dr. Bruto concludes that her “observations suggest that after 7 years, Mr. Goldman continues to show the cognitive sequelae of deficits that began with his motor vehicle accident in 2008.”
[31] Goldman submits that he first filed a Notice of Action with respect to a claim against Powers in November 2011. He asserts that it was issued but not served. There is no evidence of the Notice of Action. Further, if there was, it supports the notion that Goldman did have the wherewithal to commence an action within the appropriate limitation period. Furthermore the fact that Goldman was instructing Powers with regard to the matrimonial proceeding from August 2009 until October 26, 2009 allows this court to infer that he did not lack capacity.
[32] In light of the above, considered as well with Justice Myers decision, together with Goldman’s emails evidencing his displeasure with Powers as early as November 2009, when he was certainly very involved in the litigation process, and the lack of weight that the reports of Dr. Bruto may hold given the plaintiff never underwent a clinical examination by the doctor, I find that Goldman’s action against Powers does not have a good chance of success on the limitations issue.
[33] This claim includes other causes of action including breach of statutory duty, defamation and interference with contractual relations. On statutory duty, there is evidence that abuse had been reported and accordingly, there is little or no chance of success. Similarly on the alleged breach of the Law Society Act, the Law Society of Upper Canada has already dismissed these alleged breaches against Powers in disciplinary proceedings.
[34] The alleged defaming act described by Goldman was a private conversation between Ms. Starr (Powers’ assistant) and Mr. Powers. A court may well find that the conversation constitutes an instance of ‘qualified privilege’. As well, it may be difficult for Goldman to demonstrate that the alleged slander caused him financial loss. With regard to interference with contractual relations, there is no evidence of visible illness or emotional harm to Goldman being a direct consequence of Powers’ alleged actions.
Conclusion
[35] Attempting to balance what is just and fair to both parties, I find that it would be unfair to allow the plaintiff to proceed with this action without being required to post security for costs. Requiring Goldman to post security for costs would not have the effect of preventing an otherwise meritorious claim from proceeding. It is therefore ordered that Goldman shall post security for costs.
[36] The defendant seeks an order requiring Goldman to post security for costs of the defendant in the amount of $63,755.63 on a partial indemnity basis and $80,263.07 on a substantial indemnity basis. There is no egregious conduct that leads me to make an order on a substantial indemnity basis. The plaintiff has advanced a claim for $25 million. For this security for costs motion alone, defence counsel estimated costs of $4500.00. Given the evidence filed and the numerous attendances that were required for this motion, the defendant’s estimated Bill of Costs is extremely conservative and very reasonable.
[37] It is ordered that the plaintiff shall within sixty (60) days, post security for costs to the credit of this action with the Accountant of the Superior Court of Ontario in favour of the defendant, in the amount of $60,000.00. If the plaintiff fails to post security for costs, the action is stayed until such time as the monies are paid into court or the court orders otherwise. The defendant is entitled to move for additional security if necessary, once trial preparation is required.
[38] On the issue of the costs of the security for costs motion, the parties agreed following the hearing that they would attempt to agree on the issue of costs. If they are unable to do so within thirty (30) days, they shall write to me to either request a one half hour telephone case conference or to advise that they have agreed to deliver brief (1 – 2 page) written submissions within sixty (60) days. No reply submissions on costs may be filed without leave.
(original signed) MASTER RONNA M. BROTT Date: March 10, 2017