COURT FILE NO.: CV-09-393953 CITATION: Stojcic v. City of Toronto, 2017 ONSC 4861 DATE: 2017/08/11
SUPERIOR COURT OF JUSTICE – ONTARIO
RE: Stojcic v. City of Toronto and Toronto District School Board
BEFORE: MASTER GRAHAM HEARD: August 10, 2017
COUNSEL: M. Gratsias for the plaintiff C. Plastina for the City of Toronto (moving party) K. Murphy for the Toronto District School Board (moving party)
REASONS FOR DECISION
(Defendants’ motions for security for costs)
[1] The plaintiff alleges that on December 27, 2007, while jogging on a sidewalk and then a paved walkway under the jurisdiction of either the City of Toronto (“the City”) or the Toronto District School Board (“TDSB”), he slipped on ice and fractured his ankle. In January, 2011, he moved to Germany and he continues to reside there.
[2] Both defendants now move for security for costs of this action under rule 56.01(1)(a) of the Rules of Civil Procedure:
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.
[3] On March 30, 2016 the court scheduled the pre-trial conference in this action to proceed on October 27, 2017 and a 15 day trial to proceed on January 29, 2018. Accordingly, there is some urgency in providing the parties with these reasons.
[4] The plaintiff acknowledges that he is ordinarily resident in Germany and has no assets in Ontario. The court must therefore consider whether to exercise its discretion to “make such order for security for costs as is just”.
[5] The plaintiff submits that an order for security for costs would not be just, first, because he is impecunious and second, because of the defendants’ delay in bringing these motions.
[6] The following case law is applicable to the issue of impecuniosity:
If the applicants can demonstrate impecuniosity, they can defeat a motion for security for costs provided that their claims are not clearly devoid of merit. This is a very low evidentiary threshold. See: Zeitoun v. Economical Insurance Group (2008), 2008 CanLII 20996 (ON SCDC), 91 O.R. (3d) 131 (Div. Ct.) at para. 49
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. See: Zeitoun, supra at para. 50
Merits have a role in any application under rule 56.01, albeit in a continuum; for example, rule 56.01(1)(a) would be at the low end and rule 56.01(1)(e) would be at the high end. See: Padnos v. Luminart, 1996 CanLII 11781 (ON SC), [1996] O.J. No. 4549
The quality of the evidence required to establish impecuniosity is described by Quinn J. in Morton v. Canada (Attorney General), 2005 CanLII 6052 (ON SC), [2005] O.J. No. 948, a case in which security was sought from plaintiffs residing in Pennsylvania (at paragraph 32):
“32. In motions of this nature, the financial evidence of the plaintiffs must be set out with robust particularity. There should be no unanswered material questions, as is the case here. It is worth remembering that the financial status of the plaintiffs is known only to them. . . . Full financial disclosure is required and should include the following: the amount and source of all income; a description of all assets (including values); a list of all liabilities and other significant expenses; an indication of the extent of the ability of the plaintiffs to borrow funds; and, details of any assets disposed of or encumbered since the cause of action arose.”
[7] There are conflicting authorities on the issue of whether delay in bringing a security for costs motion can in itself be fatal to the motion. A defendant who becomes aware of circumstances that could require a plaintiff to post security should move promptly. (See: Kawkaban Corp. v. Second Cup Ltd., [2005] O.J. No. 4197 (Div. Ct.)) Some decisions say that a defendant’s unexplained delay in bringing a motion for security for costs is in itself a reason to refuse an order for security. (See: 423322 Ontario Ltd. v. Bank of Montreal (1988), 1988 CanLII 4678 (ON SC), 66 O.R.(2d) 123 (H.C.J.) and Susin v. Genstar Development Co., [2001] O.J. No. 3825) Other cases say that even unexplained delay is not a bar to an order unless the plaintiff can demonstrate prejudice arising from the delay. (See: 286018 Ontario Ltd. v. Fidinam (Canada) Ltd., [1988] O.J. No. 433 (Master) and Linshalm v. Haberler, [1997] O.J. No. 2842 (O.C.J.)
[8] In Livent Inc. v. Deloitte & Touche, 2011 ONSC 648, on a motion for security for costs on the basis that there was good reason to believe that the corporate plaintiff had insufficient assets in Ontario to pay costs (Rule 56.01(1)(d)), Master Short thoroughly considered the various authorities on the issue and concluded (at para. 80):
“80 As I have noted earlier, the plaintiff only relies on delay and has not attempted to prove any actual, specific, irreparable prejudice flowing from that delay. I believe that the law has been moving towards the position where a corporate plaintiff seeking to avoid posting any security by virtue of delay must demonstrate at least some prejudice.”
[9] Although Master Short refers to a corporate plaintiff having to demonstrate prejudice in order to defeat a security for costs motion on the basis of delay, there is no reasons that this principle should not apply equally to an individual. Accordingly, the court should consider both the extent of the defendants’ delay in bringing the motion and whether there is any evidence that any such delay has resulted in prejudice to the plaintiff. At the very least, delay on the part of the defendants in moving and prejudice to the plaintiff arising from the delay are both relevant factors to be considered by the court in making “such order for security for costs as is just”.
[10] The issues to be addressed on this motion are:
Can the plaintiff demonstrate that he is impecunious, such that he need only show that his claims are not clearly devoid of merit?
If the plaintiff cannot establish that he is impecunious, can he demonstrate that his action has a good chance of success?
Has there been delay by the defendants in bringing the motion such as should preclude an order for security?
If security is to be ordered, what is the appropriate quantum?
Has the plaintiff demonstrated impecuniosity?
[11] The plaintiff’s evidence in his responding affidavit is that he has no assets or property in Ontario or Germany to satisfy an order for security for costs. He pays the rental and living expenses for both himself and his wife. He owes a total of $36,687.58 in Canada and Ontario student loans, on which it appears that he has been making regular payments. His current credit card debt is approximately 4,500 Euros.
[12] The plaintiff has had steady employment as an IT specialist in Germany since April, 2011. Since May 1, 2016, he has earned 72,000 Euros/yr which is equivalent to at least $100,000/yr. He is currently working on a contract that ends October 31, 2017. He has provided his bank statements for the period from April 1, 2016 to May 17, 2017 and his German income tax returns for 2014, 2015 and 2016. His wife is currently a student and has no income or savings.
[13] The plaintiff calculates his total expenses to be 3,892 Euros/month which is slightly less than his current (presumably after tax) earnings of 3,929.74 Euros/month, so he has no surplus earnings each month. His expenses include rent, student loans, car payments, car insurance, internet, cell phones for himself and his wife, food for himself and his wife, monthly income support of 400 Euros to both his mother and his wife’s parents and “unexpected monthly costs” of 500 Euros for things like travel to Bosnia to visit his mother. He recently paid 2,300 Euros for the funeral for his father, who died on October 31, 2016.
[14] Plaintiff’s counsel submits that the plaintiff is currently working on a contract that ends on October 31, 2017 and there is no guarantee that he will still have work following that date. Given the plaintiff’s history of continuous employment in Germany for over six years since April, 2011, it is reasonable to assume that he will find another job commencing as soon as his contract ends. Certainly, if his expenses are as he states, he will be motivated to do so.
[15] Although the plaintiff has deposed that his current income only barely enables him to meet his expenses, and it may be that having to post security will be financially challenging for him, I cannot accept that someone earning in excess of $100,000/yr who leases a BMW motor vehicle and pays a total of 800 Euros/month to his mother and his wife’s parents is impecunious. My conclusion in this regard is similar to that of Master MacLeod (as he then was) in Pitkeathly v. 1059288 Ontario Inc., [2004] O.J. No. 4125.
[16] In addition, the plaintiff’s obligation to make complete financial disclosure includes providing evidence of his ability to borrow funds. His only evidence on this issue is his statement that “I do not have . . . the ability to borrow the necessary money to fund this lawsuit given the degree to which I am already in debt”. On cross-examination, he testified that he attempted to get a bank loan in 2012. He never attempted to get a bank loan in response to the security for costs motion and simply stated that his credit rating does not allow him to borrow any more money at the moment.
[17] Other than the plaintiff’s bald assertion that he does not have the ability to borrow money and “cannot get credit”, there is no evidence, such as a rejected loan application or a letter from a bank, to show why he could not finance a loan for the six months between now and the trial of this action. Further, he has only been married since 2015; presumably his wife’s parents were able to survive financially before he began sending them money and could still do so if he had to finance a loan between now and the trial.
[18] I therefore conclude that the plaintiff has not met his onus to establish that he is impecunious. In order to defeat the motion, he must therefore demonstrate a good chance of success in his action.
Can the plaintiff demonstrate that his action has a good chance of success?
[19] The plaintiff claims damages arising from a fractured ankle sustained when he slipped and fell on ice while jogging on the night of December 27, 2007. He alleges that he fell while stepping off a sidewalk on to a walkway leading into a school and that the area in question was under the jurisdiction of the defendants City of Toronto and Toronto District School Board. He further alleges that there was a depression in the pavement at the area where he fell which accounted for the accumulation of water and formation of ice and that the defendants knew or ought to have known of the risk to pedestrians. His discovery evidence is that he did not see any ice while he was running and was not aware of ice on the walkway until after he fell.
[20] The City of Toronto submits that the plaintiff’s discovery evidence was that on the date of his fall, the sidewalks in the area were clear of snow and ice. Further, there was no bad weather leading up to the date of the fall that would have required winter maintenance by the City. The school custodian’s evidence was that his notes of his inspection on the date of loss revealed that there were no conditions requiring winter maintenance.
[21] Generally, the evidence with respect to the liability issue is that the plaintiff fell on what appears to have been an isolated patch of ice during a Toronto winter at a time when there were no weather conditions that would warrant winter maintenance. Further, as he fell on a sidewalk or walkway, he can only recover from the City if he can establish gross negligence. Based on this evidence, I cannot conclude that the plaintiff has “a good chance of success” in his action.
Has there been delay on the part of the defendants in bringing the motion that should preclude an order for security?
[22] The defendants have been aware since the plaintiff’s examination for discovery on October 12, 2011 that he has been living in Germany since January, 2011. He has continued to reside in Germany since then. Accordingly, the defendants have been in a position to move for security for costs since October, 2011.
[23] The plaintiff delivered the trial record on April 2, 2013. Although the matter was struck from the trial list on April 25, 2014 because the trial was not scheduled, the parties did participate in mediation on June 6, 2014. The action was then restored to the trial list by court order on October 30, 2014.
[24] On March 30, 2016 (not May, 2016 as stated in the City’s supporting affidavit), the pre-trial conference in the action was scheduled to proceed on October 27, 2017 and the trial was scheduled to proceed for 3 weeks commencing January 29, 2018.
[25] Counsel for the defendant City deposes in her affidavit that prior to May, 2016 when the trial was scheduled, her client was trying to contain defence costs based on the plaintiff’s discovery evidence and medical documents that suggested that the claim was relatively modest. The City was also unsure of the plaintiff’s enthusiasm for pursuing the claim given that he had moved to Germany and appeared to have recovered from the ankle injury sustained in his fall. The City did not oppose the scheduling of the trial date on the condition that it could still bring a security for costs motion and the trial scheduling form does reflect this position.
[26] There is no evidence in the supporting affidavit of the TDSB to explain their delay in bringing their motion.
[27] The plaintiff’s evidence with respect to the prejudice to him arising from the defendants’ delay in bringing their motions sets out the date of his examination for discovery and the upcoming dates for the pre-trial conference and the trial. The plaintiff erroneously states that the defendant City served its notice of motion for this motion on June 15, 2017; in fact, the City’s notice of motion was served on March 16, 2017. The defendants’ motion records were served on June 15 and 16, 2017, returnable June 26, 2017. Service of the motion records on the last day permitted by the Rules resulted in an adjournment of the motion to give the plaintiff sufficient opportunity to prepare responding material.
[28] I accept that the defendants have delayed significantly in bringing this motion. They have been aware that the plaintiff resides in Germany since October, 2011, approximately 5 ½ years before service of the first notice of motion in March, 2017. The defendant City explains some of the delay in moving on the basis that the plaintiff appeared to have made a good recovery from his injury, his claim seemed relatively small and he had moved to Germany. This is a plausible explanation for not moving at least until the plaintiff’s motion to restore the action to the trial list in October, 2014.
[29] However, once the plaintiff circulated the trial scheduling form and scheduled the pre-trial conference and a 15 day trial in March, 2016, the defendants should have been aware that the plaintiff intended to proceed with the action and brought their motion if they saw fit to do so. There is no explanation for the one year delay between March, 2016 and March, 2017 in the defendants initiating the motion. Further, the defendants ought to have known that by serving their motion records on the last date permitted by the Rules, the plaintiff, whose residence in Germany is the basis for their motion, would be forced to request an adjournment in order to be able to prepare, sign and file a responding affidavit. The defendants’ further delay in the delivery of their materials resulted in the motion not being argued until 11 weeks before the pre-trial conference and less than six months before trial.
[30] The plaintiff’s only evidence as to what prejudice he may have sustained as a result of the defendants’ delay is that prior to service of the motion materials, he had no reason to believe that he would not be permitted to proceed to trial without being asked to provide security for costs and accordingly was “lulled into a false sense of security”. He then makes the bald statement that the defendants’ delay has caused him “extreme prejudice and emotional distress”.
[31] What order for security for costs, if any, would be just where the defendants have been in a position to bring the motion since October, 2011, the pre-trial conference and trial were scheduled in March, 2016, the defendants did not initiate any motion until March, 2017 and the defendants’ further delay resulted in the motions not being argued until August 10, 2017, 11 weeks before the pre-trial conference and less than 6 months before the trial?
[32] The answer lies in balancing the defendants’ right to protection of their recovery of costs in the event of a favourable outcome at trial with the plaintiff’s ability to provide security for costs at a late stage of the litigation process. The fact is that the plaintiff would have been in a very similar position with respect to his ability to post security even if this motion had been brought a year ago. The main difference is that the defendants’ delay in moving now creates a situation of urgency for the plaintiff in obtaining funding to post security.
[33] In these circumstances, the appropriate order is to require the plaintiff to post security only for the trial of the action and not until after the pre-trial conference is held. If it were so important to the defendants to have security for the initial stages of the action, or for the pre-trial conference, they should have brought the motion months if not years ago.
The appropriate quantum of security
[34] The defendant City seeks costs of the trial of this action based on a statement in its counsel’s supporting affidavit of estimated costs of between $100,000.00 and $130,000.00. These appear to be their actual costs and not partial indemnity costs. Taking 60% of an estimated figure of $125,000.00 for actual costs results in partial indemnity costs of $75,000.00.
[35] The defendant TDSB has filed a draft Bill of Costs showing partial indemnity trial costs, including preparation, of $115,500.00.
[36] The defendants’ estimates of costs are based on the assumption that this case will require a 15 day trial, which was the estimate provided to the presiding judge at trial scheduling court. However, I am at a loss to understand how this case could take 15 days to try.
[37] The case will be tried by a judge sitting alone which means that the trial will proceed much more expeditiously than if tried by a jury. The plaintiff will be able to submit much of his medical evidence by way of filing documents such as hospital records and his only medical witness may well be the only expert from which he has served a report. There are vague references in the scheduling form to other experts to be called by all parties but no other reports have been served. As the pre-trial conference is less than 90 days away, the deadline has passed for the plaintiff to deliver any more expert reports and there is no evidence that the defendants have requested a defence medical examination. The defendants will presumably both call a couple of witnesses to address the liability issue. It is therefore difficult to imagine that the trial of this case would take even 10 days, let alone 15.
[38] The security required to be posted by the plaintiff should reflect a realistic estimate of the length of trial which will, of course, reflect realistic preparation time. On this basis, I order that the plaintiff post security for costs of a total of $100,000.00, based on $50,000.00 for each of the moving defendants, by paying that amount to the accountant of the Ontario Superior Court of Justice, by December 15, 2017.
Costs
[39] At the conclusion of the hearing, counsel exchanged costs outlines, provided copies to the court and made brief submissions. Given my decision on the motion, on which I made some findings favourable to the defendants and some favourable to the plaintiff, I will give the parties the opportunity to resolve the costs issue among themselves.
[40] If the parties cannot agree on the costs of the motion, they may make written submissions, not exceeding three pages each, the moving parties within 30 days and the plaintiff within 20 days thereafter.
Master Graham
DATE: August 11, 2017