CAMS ATLAS, LLC v. STANG, 2017 ONSC 6170

CITATION: CAMS ATLAS, LLC v. STANG, 2017 ONSC 6170

COURT FILE NO.: CV-16-561580

DATE: 20171016

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

CAMS ATLAS, LLC

Plaintiff

– and –

DARREL STANG, in his capacity as trustee of ALIGNED VENTURES INNOVATIVE FUND, GORDON D. PUTNAM, Q.C., in his capacity as trustee of ALIGNED VENTURES INNOVATIVE FUND, PETER PURDON, in his capacity as Trustee of ALIGNED VENTURES INNOVATIVE FUND, WATER EXCHANGE, INC., TECH SONIC INTERNATIONAL (f/k/a, TECH SONIC INTERNATIONAL LTD. and/or TECH SONIC, TECH SONIC SERVICES L.P.) TECH SONIC LIMITED PARTNERSHIP, SHAWN SMITH and ROBERT ORR

Defendants

– and –

WATER EXCHANGE, INC. and TECH SONIC INTERNATIONAL INC.

Plaintiffs by Counterclaim

– and –

CAMS ATLAS, LLC

Defendants by Counterclaim

COUNSEL:

Eliot N. Kolers and Vlad A. Calina, for the Plaintiff/Defendant by Counterclaim

Sean Foran and Lia Boritz, for the Defendants/Plaintiffs by Counterclaim

HEARD: September 19, 2017

REASONS FOR DECISION

J. E. FERGUSON, J.

[1] This was initially a two-part motion. The first was a partial summary judgment motion brought by the plaintiff, CAMS Atlas, LLC (“CAMS”), against the defendant Water Exchange, Inc. (“Water Exchange”) for recognition of the New York court default judgment it obtained against Water Exchange. That aspect of the motion was unopposed by Water Exchange and I signed the requested order. The second was the defendants’ motion for security for costs arising out of enforcement proceedings in relation to that order. These are the reasons dealing with the decision to grant the order for security for costs.

[2] The parties do not dispute the law regarding the posting of security for costs under r. 56 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. CAMS is ordinarily resident outside Ontario. Further, CAMS is a corporation and there is good reason to believe that it has insufficient assets in Ontario to pay the costs of the defendants. There is a “twist” in this aspect in view of CAMS’ foreign judgment against Water Exchange (an asset) now recognized in Ontario as a result of the unopposed order signed by me.

[3] What is in issue is the branch of the test which places the onus on CAMS to demonstrate that a security for costs order would be unjust. CAMS makes the following submissions:

a) There is no absolute right to security for costs. “[S]atisfying one of the grounds set out in rule 56.01(a) to (f) does not establish a prima facie right to security for costs, but only triggers an inquiry as to whether it would be just, in all the circumstances, to make such an order.”[^1] This second stage is “clearly permissive and requires an exercise of discretion which can take into account a multitude of factors”.[^2] Justice Doherty (as he then was) explains that this broad discretion includes the power to decline to order that security for costs be posted at all, stating as follows:

I take this second stage to require an inquiry into all factors which may assist in determining the justice of the case. I also take the discretion created by this second stage as permitting orders which range from an order requiring full security for costs in a lump sum payment to an order which provides that no security for costs need be posted.[^3]

b) CAMS has the onus to demonstrate that a security for costs order would be unjust. CAMS can meet its onus by demonstrating, among other things, one of the following:

i. CAMS has sufficient assets in Ontario or a reciprocating jurisdiction to satisfy a costs award;

ii. CAMS is impecunious and an