Solea International BVBA v. Bassett & Walker International Inc.

Court File No.: CV-15-00527848 Date: 2018-05-30 Superior Court of Justice - Ontario

Re: Solea International BVBA, Plaintiff And: Bassett & Walker International Inc., Defendant

Before: Master B. McAfee

Counsel: A. Lewis, Counsel for the Moving Party, the Defendant A. Mazzotta, Counsel for the Responding Party, the Plaintiff

Heard: May 23, 2018

Reasons for Decision

[1] This is a motion brought by the defendant for an order for security for costs. The plaintiff opposes the motion.

[2] The plaintiff agrees that the defendant has satisfied its initial onus to demonstrate that it appears that there is good reason to believe that the matter comes within Rule 56.01(a) and (d) of the Rules of Civil Procedure.

[3] The onus now shifts to the plaintiff to satisfy the court that an order for security for costs would be unjust.

[4] In Yaiguaje v. Chevron Corporation, 2017 ONCA 827 at paragraphs 23-25, the Court of Appeal states as follows with respect to consideration of the justness of the order:

[23] The Rules explicitly provide that an order for security for costs should only be made where the justness of the case demands it. Courts must be vigilant to ensure an order that is designed to be protective in nature is not used as a litigation tactic to prevent a case from being heard on its merits, even in circumstances where the other provisions of rr. 56 or 61 have been met.

[24] Courts in Ontario have attempted to articulate the factors to be considered in determining the justness of security for costs orders. They have identified such factors as the merits of the claim, delay in bringing the motion, the impact of actionable conduct by the defendants on the available assets of the plaintiffs, access to justice concerns, and the public importance of the litigation. See: Hallum v. Canadian Memorial Chiropractic College (1989), 1989 CanLII 4354 (ON SC), 70 O.R. (2d) 119 (H.C.); Morton v. Canada (Attorney General) (2005), 2005 CanLII 6052 (ON SC), 75 O.R. (3d) 63 (S.C.); Cigar500.com Inc. v. Ashton Distributors Inc. (2009), 2009 CanLII 46451 (ON SC), 99 O.R. (3d) 55 (S.C.); Wang v. Li, 2011 ONSC 4477 (S.C.); and Brown v. Hudson’s Bay Co., 2014 ONSC 1065, 318 O.A.C. 12 (Div.Ct.).

[25] While this case law is of some assistance, each case must be considered on its own facts. It is neither helpful nor just to compose a static list of factors to be used in all cases in determining the justness of a security for costs order. There is no utility in imposing rigid criteria on top of the criteria already provided The correct approach is for the court to consider the justness of the order holistically, examining all of the circumstances of the case and guided by the overriding interests of justice to determine whether it is just that the order be made.

[5] In my view, the interests of justice require that no order for security for costs be made in the circumstances of this case.

[6] The action was commenced on May 8, 2015 under the Simplified Procedure. The plaintiff claims damages with respect to an unpaid invoice for a shipment of seafood product.

[7] On or about June 16, 2015, the defendant served a statement of defence and counterclaim denying any obligation to pay the invoice and counterclaiming for lost profit and damages for damage to business reputation.

[8] On or about June 25, 2015, the plaintiff served a reply and defence to counterclaim.

[9] In October and November of 2015, the parties exchanged affidavits of documents.

[10] On January 20, 2016, examinations for discovery took place.

[11] The defendant subsequently advised that it intended to bring a motion for summary judgment. In response, the plaintiff advised that it also intended to bring a motion for summary judgment. On April 12, 2016, the parties attended Civil Practice Court and obtained the date of July 27, 2016, for the summary judgment motions.

[12] On July 27, 2016, the summary judgment motions proceeded before the motion Judge. The defendant also sought an order for security for costs. At the commencement of the motions, the defendant chose not to proceed with its counterclaim and withdrew the counterclaim. Following the hearing, written submissions were delivered. For reasons released on December 7, 2016, the motion Judge granted the plaintiff’s motion for summary judgment. According to the evidence of the defendant, the motion Judge implicitly dismissed the defendant’s motion for summary judgment and security for costs.

[13] On March 23, 2017, following further submissions, the motion Judge’s costs endorsement was released. Costs were awarded to the plaintiff on a substantial indemnity basis.

[14] The defendant appealed the motion Judge’s order to the Court of Appeal. The plaintiff cross-appealed on the issue of the applicable interest rate. The appeal was scheduled for November 16, 2017.

[15] On November 13, 2017, the parties received a communication from the Senior Legal Officer of the Court of Appeal advising that the Panel hearing the appeal has directed that counsel should be prepared to make submissions on the applicability of the United Nations Convention on Contracts for the International Sale of Goods incorporated into Ontario law by the International Sales Conventions Act, R.S.O. 1990, c.I.10.

[16] After receipt of the November 13, 2018, communication from the Court of Appeal counsel exchanged emails about the argument of the appeal. Counsel for the defendant stated that it was the defendant’s position that the Convention applies but it does not much matter because the applicable principles are the same as the applicable common law principles.

[17] The Court of Appeal set aside the summary judgment and remitted the matter to the motion Judge for a new hearing. In the reasons for decision, the Court of Appeal states that the parties appear to have assumed that the contract was governed by domestic Ontario law and that no issue was raised before the motion Judge with respect to the law governing the contract. As the matter had not been raised before the motion Judge, the Court of Appeal could not be certain that the motion Judge’s analysis and conclusions might not have been different had the issue of the proper law of the contract been argued. No costs of the appeal and cross-appeal were ordered.

[18] The new hearing is now scheduled for July 3, 2018.

[19] Whether counsel for the defendant will take a different position with respect to the Convention at the new hearing is not known. Neither party made specific submissions before me concerning how the application of the Convention may or may not alter the outcome at the new hearing. The defendant took the position that it would be inappropriate to consider the merits on the within motion.

[20] The plaintiff does not allege impecuniosity or financial hardship.

[21] The plaintiff has already succeeded in obtaining judgment once. If the application of the Convention results in a different outcome at the new hearing, it will be as a result of an issue not previously raised by any party. It would be unjust to require the plaintiff to post security for costs in these circumstances.

[22] The first motion for security for costs was brought only after the majority of the steps in the action had taken place. Documentary discovery and oral discovery had taken place. All the material for summary judgment and security for costs motions were prepared at the same time. While there is no evidence of prejudice as a result of the timing of this motion, in my view the timing of this motion is a relevant consideration that also weighs against the granting of security for costs in the circumstances of this case (SeeWind Design Corp. (Re), [2013] O.J. No. 3941 (Master) at paras.73, 74, 80, 94).

[23] In my view it would be unjust to require the plaintiff to post security for costs at this stage in these circumstances.

[24] The motion is dismissed.

[25] If successful on the motion the plaintiff seeks costs of the motion in the all-inclusive sum of $1,933. If successful on the motion the defendant seeks costs of the motion in the all-inclusive sum of $4,813.80. The plaintiff was successful on the motion. In my view the all-inclusive sum of $1,933.00 is a fair and reasonable amount that the defendant could expect to pay for costs in all of the circumstances of the motion. Costs of the motion are fixed in the all-inclusive sum of $1,933.00 payable by the defendant to the plaintiff within 30 days.

Master B. McAfee

Date: May 30, 2018