Energy Investment Company v. Kinross Africa S.L., 2017 ONSC 7021
CITATION: Energy Investment Company v. Kinross Africa S.L., 2017 ONSC 7021
COURT FILE NO.: CV-15-00538480
MOTION HEARD: 20171031
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Energy Investment Company, Plaintiff
AND:
Kinross Africa S.L., Defendant
BEFORE: Master B. McAfee
COUNSEL: N. Calla, Counsel for the Moving Party, the Defendant L. Lutwak, Counsel for the Responding Party, the Plaintiff
HEARD: October 31, 2017
REASONS FOR DECISION
[1] This is a motion brought by the defendant for an order pursuant to Rule 56.01(1)(d) of the Rules of Civil Procedure requiring the plaintiff to post security for costs in the amount of $59,688.55.
[2] The defendant opposes the motion.
[3] The applicable test is set out by Master Muir in Sadat v. Westmore Plaza Inc., [2013] O.J. No. 309 (Master) at paras. 20-22. When determining the justness of a security for costs order, while the case law is of assistance, each case must be considered on its own facts (Yaiguaje v. Chevron Corporation, 2017 ONCA 827 at para. 25).
[4] The initial onus is on the defendant to satisfy the court that it appears that the plaintiff falls within one of the subrules of Rule 56.01(1). If the initial onus is satisfied, the onus shifts to the plaintiff to demonstrate that an order for security for costs would be unjust.
[5] The plaintiff concedes that the defendant has satisfied the first part of the test and that plaintiff falls within Rule 56.01(1)(d). The plaintiff submits that the defendant also satisfies the first part of the test with respect to Rule 56.01(1)(a). The plaintiff argues that it would be unjust to require it to post security for costs because the plaintiff was forced to litigate in this jurisdiction, the case has a good chance of success and due to the defendant’s delay in bringing the motion.
[6] In this action, the plaintiff claims against the defendant for breach of a consulting agreement. Clause 3.19 of the agreement provides as follows:
This Agreement shall be governed by the laws of the Province of Ontario and the federal laws of Canada applicable therein, without regard to the conflict of laws principles thereof. The parties hereby attorn to the exclusive jurisdiction of the courts of the Province of Ontario for the purposes of adjudicating any action or proceeding to enforce the terms of this Agreement.
[7] The plaintiff argues that it has been forced to litigate in this jurisdiction as a result of the above-noted clause and argues that the clause is a barrier to the plaintiff’s access to justice. The agreement that contains this clause is the same agreement that the plaintiff wishes to have enforced in this action. There is no evidence that the plaintiff would be prevented from proceeding with this action if an order for security for costs was granted. I am not satisfied that the agreed choice of forum clause militates against an order for security for costs in these circumstances.
[8] The plaintiff does not argue sufficiency of assets or impecuniosity. The plaintiff argues that the claim has a good chance of success (Zeitoun v. Economical Insurance Group, 2008 20996 (ON SCDC), 2008 CarswellOnt 2576 (Div.Ct.) at para. 50; affirmed, 2009 ONCA 415 (C.A.)).
[9] The plaintiff seeks damages in the amount of $369,054.10 for breach of contract. The plaintiff’s position is that the claim represents compensation owing in accordance with the formula specified in the written agreement and that the amounts owing are payable pursuant to the agreement. The plaintiff relies on clause 3.21 of the agreement that provides that no amendment to the agreement is valid or binding unless in writing and executed by the parties.
[10] The defendant’s position is that in or about December 2013, the parties agreed verbally to amend the agreement and that the parties had been conducting themselves in accordance with that verbal agreement. The defendant’s position is that no amount is owing to the plaintiff.
[11] The majority of the amount sought by the plaintiff concerns payment of monthly fees. Prior to December 2013, the plaintiff submitted monthly invoices to the defendant for actual hours worked. After December 2013, the plaintiff submitted monthly invoices in the fixed amount of €30,000.00 plus expenses. It is the defendant’s position that the amount of €30,000.00 was a cap verbally agreed to in December 2013. It is the plaintiff’s position that the €30,000.00 was not a cap but represented only a partial payment and that the outstanding actual hours worked would ultimately be paid. After the defendant terminated the agreement in February 2015, the plaintiff submitted invoices for certain hours worked that had not been paid dating back to January 2013. Neither the plaintiff’s position nor the defendant’s position are specifically reflected in the written agreement.
[12] The plaintiff also claims for amounts owed by the plaintiff to an outside consultant and for an expatriate director’s package. With respect to amounts owing for an outside consultant, the plaintiff’s evidence on examination for discovery was that the defendant was billed for an outside consultant in the past and that the amounts had previously been paid. There is an issue concerning whether any work done by the outside consultant in January 2015 had been approved by the defendant. With respect to the expatriate director’s package, there is an issue of credibility concerning whether the plaintiff was promised such a package.
[13] Based on the material before me, the success or failure of the plaintiff’s claim does not appear obvious. In my view, the merits are a neutral factor on this motion.
[14] With respect to the issue of delay, this motion was brought approximately one and a half years after the service of the statement of defence and after completion of examinations for discovery. The statement of claim was issued on October 15, 2015. The statement of defence is dated November 26, 2015. The defendant was examined for discovery on January 17, 2017. The plaintiff was examined for discovery on January 18, 2017. The notice of motion was served on or about April 24, 2017, and the motion record was served on or about May 4, 2017. Mediation has not taken place. The action has not been set down for trial.
[15] The plaintiff is a corporation with its registered office in the Netherlands. There is no evidence before me that the plaintiff had any connection with Ontario at any time or carried on business in Ontario at any time or had any assets in Ontario at any time. There is no evidence before me concerning when the defendant first had good reason to believe that the plaintiff had insufficient assets in Ontario (Kawkaban Corp. v. Second Cup Ltd., [2005] O.J. No. 4197 (Div.Ct.) at para. 30).
[16] There is also no evidence before me of any prejudice to the plaintiff or evidence that the plaintiff would have conducted itself differently had an order for security for costs been sought earlier in the action. As noted above, there is no evidence before me that an order for security for costs would effectively end this proceeding.
[17] In these circumstances, the timing of this motion is not fatal. However, the timing of this motion ought to impact the quantum of security which in the circumstances of this case should reflect only the costs of the proceeding from this point forward (Livent Inc. (Receiver and Manager of) v. Deloitte & Touche, [2011] O.J. No. 1660 (Master) at para. 46).
[18] Having regard to all of the circumstances of the case and the justness of the order sought, I am exercising my discretion to grant an order that the plaintiff post security for costs.
[19] With respect to the quantum of security for costs, as noted above, only prospective costs are reasonable in the circumstances of this case. There is limited evidence before me concerning the quantum sought. The bill of costs sets out the fees for the remaining steps of mediation, pre-trial and trial in the amount of $31,850.00 plus HST and disbursements for photocopying, laser printing and scanning for both the mediation and the within motion in the amount of $534.00 plus HST.
[20] Having regard to the matters in issue in this action, in my view the defendant’s estimated trial length of four days is not unreasonable. However, I am not satisfied that the total number of lawyer hours of 123 hours for mediation, pre-trial and a four day trial is reasonable. In my view the amount sought is too high. I am ordering that security for costs on a partial indemnity basis be fixed in the all-inclusive sum of $20,000.00 to be posted as follows: $2,500.00 to be posted 60 days prior to mandatory mediation; $2,500.00 to be posted 60 days prior to the pre-trial conference; and, $15,000.00 to be posted 90 days prior to the commencement of trial.
[21] With respect to the relief at paragraphs 2 and 3 of the notice of motion, Rule 56.05 and Rule 56.07 address the relief in this regard and it is not necessary to make the orders sought in the circumstances.
[22] With respect to costs of the motion, although security for costs is ordered, I am not awarding security for costs in the amount sought. The defendant is entitled to some costs of the motion but not costs in the amount sought of $16,000.00, which is not a fair and reasonable amount that the plaintiff could expect to pay for security for costs in all of the circumstances of this motion. The affidavit relied on by the defendant is a two page affidavit from a law clerk. The responding affidavit is three pages in length. No cross-examinations took place. In my view a fair and reasonable amount that the plaintiff could expect to pay for costs is the all-inclusive amount of $4,500.00. I am also satisfied that costs payable to the defendant in the cause is more just in all of the circumstances of this motion.
[23] Order to go as follows:
- The plaintiff shall post the all-inclusive sum of $20,000.00 as security for costs as follows:
a. the all-inclusive amount of $2,500.00 to be posted 60 days prior to mandatory mediation;
b. the all-inclusive amount of $2,500.00 to be posted 60 days prior to the pre-trial conference; and,
c. the all-inclusive amount of $15,000.00 to be posted 90 days prior to the commencement of the trial.
These amounts shall be payable in cash or by way or an irrevocable stand-by letter of credit from a Canadian chartered bank, in a form approved by the defendant or the court;
Costs of the motion are fixed in the all-inclusive amount of $4,500.00, payable by the plaintiff to the defendant in the cause.
Master B. McAfee
Date: November 29, 2017