Court File and Parties
COURT FILE NO.: FC-13-709-0 DATE: 2017/04/05 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
FARHAD DERAKHSHAN Applicant – and – SEEMA NARULA Respondent
Counsel: Farhad Derakhshan, Self-Represented Ian Vallance, Denyse Boulet, for the Respondent
HEARD: In writing
Decision on Respondent’s Motion for Security for Costs
L. SHEARD J.
[1] The respondent, Seema Narula (“Narula”), brings a motion for security for costs against the applicant, Farhad Derakhshan (“Derakhshan”). This motion had been brought well before the trial but was never reached until February 28, 2017. Even on that date there was insufficient time for oral argument and the motion had to proceed in writing. By February 28, 2017, there had already been nine days of trial: November 28, 2016 to December 8, 2016.
[2] The trial was originally scheduled for two weeks. At the end of the two weeks, it was clear that additional trial time would be required. The trial was adjourned to the week of April 3, 2017, with 12 trial days allotted to complete the trial. By reason of trial scheduling priorities, the trial had to be adjourned by one week to April 10, 2017.
Grounds for Making an Order for Security for Costs
[3] Rule 24(13) of the Family Law Rules, O. Reg. 114/99 (the “FLR”), provides as follows:
A judge may, on motion, make an order on security for costs that is just, based on one or more of the following factors:
(1) A party normally resides outside Ontario. (2) A party has an order against the other party for costs that remains unpaid, in the same case or another case. (3) A party is a corporation and there is good reason to believe it does not have enough assets in Ontario to pay costs. (4) There is good reason to believe that a case is a waste of time or a nuisance and that the party does not have enough assets in Ontario to pay costs. (5) The statute entitles the party to securities for costs.
[4] In this case, the only rule that might apply is r. 24(13) (4): Is there good reason to believe that the case is a waste of time or a nuisance?
[5] Derakhshan has represented himself at trial. By contrast, Narula was represented by two lawyers throughout the trial, who have voiced frustration at how Derakhshan is conducting himself at trial.
[6] Narula asserts that Derakhshan has caused needless delays in the litigation and in the trial. Narula has enumerated 13 separate examples of delays caused by Derakhshan including: that Derakhshan had voluminous, confusing and unindexed materials; Derakhshan used court time on irrelevant information; and he called witnesses whose evidence is not relevant or helpful.
[7] Valuable trial time was spent on motions brought by or because of Derakhshan: Derakhshan had summonsed as witnesses two federal employees, which led to two motions brought by the Attorney General for Canada to strike the summonses. Those motions were granted.
[8] Derakhshan also brought a motion for the production of documents, to amend his pleadings to add parties and for other relief. Derakhshan’s motion was argued on February 28, 2017 and was dismissed.
[9] Narula’s claims that Derakhshan has delayed the commencement and progress of the trial has merit. As a self-represented party, Derakhshan has failed to inform himself about the rules of evidence or to give careful thought to the evidence that he needs to lead in order to establish his claim. Derakhshan was ill-prepared when he gave evidence and disclosed that he has been unable to interview many of the witnesses he seeks to call. For that reason he has been uncertain about what evidence they will give and whether it will be relevant.
[10] To his credit, Derakhshan appears to have complied with the direction given to him by this Court to provide a list of his witnesses, a summary of their evidence, and the time he will need for their evidence.
[11] In his responding materials on this motion, Derakhshan asserts, with some merit, that Narula did not provide disclosure of documents until after the trial commenced. He points to the fact that in the first days of the trial Narula provided Derakhshan with a box of documents that he had asked for prior to trial. As a result, had to review and digest these documents while preparing for trial.
[12] While the presentation of Derakhshan’s case leaves much to be desired, it is premature for this Court to determine the outcome of this trial or to conclude the Derakhshan’s claim is a waste of time and/or a nuisance.
[13] Derakhshan himself acknowledges his lack of skill and competency in presenting his own case. However, if that were a ground for awarding security for costs, such orders would be commonly granted. In fact, the jurisprudence suggests that such orders are made only in exceptional cases (see Bragg v Bruyère, 2007 ONCJ 515 and Hodgkins v. Buddhu, 2013 ONCJ 137, 28 R.F.L. (7th) 492).
[14] Accepting that the presentation of the case is done in a manner that wastes court time is different from concluding that the case itself is a waste of time or a nuisance. If every litigant had to prove that their claim had a good chance of success, failing which an order for security for costs would be made, many litigants would be prevented from seeking recourse in the courts.
[15] It is unfortunate when costs are incurred unnecessarily in any trial. However, that is not uncommon, and is perhaps more common when the parties are self-represented. Certainly, the jurisprudence is clear that those who represent themselves must make a reasonable assessment of their chance for success and their potential exposure to an adverse award of costs. A self-represented party cannot expect special treatment or exemption from the cost consequences of an unsuccessful claim.
Derakhshan’s Assets
[16] Narula submits that Derakhshan does not have enough assets in Ontario to pay costs. In his affidavit on this motion sworn February 22, 2017, Derakhshan attached an unsworn financial statement (property and support claims). In it, Derakhshan states that he has annual employment income of $39,988.00. However, attached to this unsworn financial statement is Derakhshan’s 2016 T-4, which shows income of $26,915.00. The discrepancy is unexplained but is perhaps attributable to the fact that Derakhshan is paid through his own company, 7321392 Canada Ltd. operating as OCCAC, which may provide him with income that is not reported in his T-4.
[17] In his unsworn financial statement, Derakhshan states that he has a one-half interest in 1375 Cedarcroft, Ottawa, Ontario, a property he co-owns with his son. Derakhshan calculates this one-half interest to be $110,000.00, less the mortgage of $70,000.00. If accurate, that would leave him with equity of approximately $40,000.00. Derakhshan states he has vehicles worth a total of $41,500.00, and money in the bank totalling $18,546.00 but credit card debt of $22,000.00. Based on the foregoing, it would appear that Derakhshan’s assets total approximately $78,000.00, before accounting for taxes payable upon the disposition of any of his assets.
Costs of the Trial
[18] It is possible that, if unsuccessful in this litigation, Derakhshan could be ordered to pay costs equal to or exceeding $78,000.00. However, based on the evidence before me on this motion, it is not clear that Derakhshan does not have enough assets in Ontario to pay costs.
[19] In addition, Derakhshan claims that he has been impoverished by the actions of Narula. He resists this motion, in part, on the basis that the reason for his diminished assets is Narula’s refusal to properly compensate him for his work on investments they made together or to pay him for his interest in those investments. He also claims that Narula wrongly transferred to herself his shares in a corporation called Turtle Island Staffing. Although this action is within the framework of a family law claim, claims for quantum merit and/or unjust enrichment are a central part of Derakhshan’s claims.
[20] As set out above, I cannot conclude that Derakhshan does not have enough assets in Ontario to pay costs. Further, even if I were to reach that conclusion, given the nature of Derakhshan’s claims, it would not be just to make an order for security for costs.
Disposition
[21] For the reasons set out above, Narula’s motion for security for costs is dismissed.
[22] As Derakhshan has been successful in this motion, he is entitled to costs. If the parties cannot agree to costs, then Derakhshan may serve and file his written costs submissions within 30 days of the date of release of this Decision. Within 15 days after service upon her of Derakhshan costs submissions, Narula will serve and file her responding costs submissions. The submissions of each party are not to exceed three pages in length, plus any Bill of Costs or Offers to Settle.