Court File and Parties
COURT FILE NO.: CV-17-00575764 MOTION HEARD: 20180822 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Hossein Aboutaleb-Maragheh, Plaintiff AND: Payman Khanlari and Sanam Sarah Khanlari, Defendants
BEFORE: Master B. McAfee
COUNSEL: Payman Khanlari, in Person, Moving Party, Defendant Peter Jervis and Golnaz Nayerahmadi for the Plaintiff, Moving Party
HEARD: August 22, 2018
REASONS FOR DECISION
Introduction
1This is a motion brought by the defendant, Payman Khanlari (the defendant) pursuant to Rule 56.01(1)(a) and (e) of the Rules of Civil Procedure for an order requiring the plaintiff Hossein Aboutaleb-Maragheh (the plaintiff) to post security for costs. The plaintiff opposes the motion.
2The defendant Sanam Sarah Khanlari (the co-defendant) has not defended the action to date.
Legal Framework
3The application of Rule 56.01 involves a two-step analysis. The first step of the analysis requires the defendant to establish that it appears that the plaintiff is ordinarily resident outside of Ontario (Rule 56.01(1)(a)) or that it appears that there is good reason to believe that the action is frivolous and vexatious and that the plaintiff has insufficient assets in Ontario to pay the costs of the defendant (Rule 56.01(1)(e)).
4If the defendant discharges his initial onus and establishes that it appears that the plaintiff falls under Rule 56.01(1)(a) or (e), the second step of the analysis requires the plaintiff to establish the basis for a broad flexible exercise of discretion that an order for security for costs would be unjust.
Step One: Residency
5The defendant has satisfied his initial onus to demonstrate that it appears that there is good reason to believe that the matter comes within Rule 56.01(1)(a) of the Rules of Civil Procedure.
6The plaintiff’s evidence is that he lives in California in a home that he rents. He works in California driving for Uber. On cross-examination, the plaintiff stated that he only returns to Ontario “…just once a year or sometimes one, and like, half a year, one and a half year.” He believes that he was last in Ontario “before one year.” When he was last in Ontario he stayed between two weeks and one month, although he stated that he does not recall exactly. When he returns to Ontario he stays with his daughter in her one bedroom condominium.
7The evidence of the plaintiff’s daughter on cross-examination is that the plaintiff stays with her a couple of times a year for one to three weeks each time. Although the plaintiff files tax returns in Ontario and receives Canadian pension and federal benefits, this is not determinative. He also files tax returns in the US. I am satisfied that it appears that the plaintiff is ordinarily resident outside of Ontario.
8As I have found that there is good reason to believe that the matter comes within Rule 56.01(1)(a), it is not necessary for me to also determine if there is good reason to believe that the matter comes within Rule 56.01(1)(e). Had I been required to make a determination that there is good reason to believe that the matter comes within Rule 56.01(1)(e), the defendant would not have satisfied his initial onus in that regard.
Step Two: Justness of the Order
9The onus now shifts to the plaintiff to satisfy the court that an order for security for costs would be unjust.
10In 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:
23The 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.
24Courts 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), 70 O.R. (2d) 119 (H.C.); Morton v. Canada (Attorney General) (2005), 75 O.R. (3d) 63 (S.C.); Cigar500.com Inc. v. Ashton Distributors Inc. (2009), 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.).
25While 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.
11I am satisfied that the interests of justice require that no order for security for costs be made in the circumstances of this case.
Impecuniosity
12I am satisfied that the plaintiff is impecunious. The plaintiff has produced US and Canadian tax documents, credit card statements, car lease, insurance bill and apartment rental agreement. The plaintiff earns approximately $20,000.00 per year. He has credit card debt of approximately $17,000.00 USD. He does not own a vehicle but leases a vehicle for approximately $460.00 USD per month. His monthly insurance payments are approximately $860.00 USD per month. He rents an apartment for approximately $2,000.00 USD per month. Between 2017 and 2018 he borrowed approximately $15,000.00 from a family member of which he still owes $8,000.00. The plaintiff is represented in this action on a contingency basis.
Merits of the Claim
13Having found that the plaintiff is impecunious, I am also satisfied that the action is not plainly devoid of merit. Even if I am wrong and the plaintiff is not impecunious, the plaintiff has also satisfied the higher threshold of establishing that the action has a good chance of success.
14In August 2003, the plaintiff’s late wife contracted the SARS virus and passed away. Approximately two years after the plaintiff’s late wife passed away, the plaintiff and the co-defendant began a romantic relationship. The defendant is the adult son of the co-defendant. On or about March 23, 2010, following a legal action brought as a result of the death of his late wife, the plaintiff received a settlement cheque in the amount of $314,105.01. The plaintiff and the co-defendant were married on June 26, 2010.
15It is the plaintiff’s evidence that shortly after receiving the settlement funds he spoke with the co-defendant about his wishes to live on interest from the settlement funds. It is the plaintiff’s evidence that the co-defendant told him to lend the money to the defendant and the co-defendant would personally guarantee the loan.
16It is the plaintiff’s evidence that on or about April 23, 2010, he loaned the defendant USD $300,000.00. The plaintiff’s evidence is that the loan would be payable on a demand basis. The defendant was to provide monthly interest payments amounting to 7% per annum. The co-defendant guaranteed the loan. It is the plaintiff’s evidence that monthly interest payments were made to him until June 2015. After payments stopped, the plaintiff demanded the payment of the loan. In this action, the plaintiff seeks, inter alia, damages for breach of the loan agreement and for breach of the loan guarantee.
17The defendant does acknowledge that on April 23, 2010, the plaintiff transferred USD $300,000.00 to a company the defendant was a director of. However, it is the defendant’s evidence that the plaintiff did not loan any money. It is the defendant’s evidence that the estate of the defendant’s grandfather in Iran loaned the defendant’s company USD $300,000.00. It the defendant’s evidence that the plaintiff was acting as an intermediary only due to the difficulties and expense in transferring funds from Iran. The defendant’s evidence is that he did make monthly payments but they were not loan repayments. It is the defendant’s evidence that the payments were made to help the co-defendant with expenses because the co-defendant and plaintiff were unable to provide adequately for their living and household expenses.
18The defendant’s grandfather passed away in 1995. When the defendant’s grandfather passed away, his grandfather’s spouse, seven children and over twenty-five grandchildren were alive, all of whom would have been heirs. The defendant does not know the name of the lawyer who was the trustee for his grandfather’s estate. The defendant does not know the address in Iran for the trustee of the grandfather’s estate. The defendant has no documents in his possession concerning the loan from his grandfather’s estate. The defendant’s evidence is that he is certain that the loan from his grandfather’s estate was repaid but he has no documents evidencing the repayment.
19The defendant relies in part on the Taheri Exchange Services transaction record dated April 23, 2010, evidencing the transfer of USD $300,000.00 and the statement in the document that the purpose of the transfer is “Business Loan Relation Grandfather/Grandson and director of Company.” However, the document also indicates that the source of funds is savings. This document was prepared after the plaintiff authorized Taheri to discuss all matters on the account with the defendant.
20The defendant also relies on documents filed by the co-defendant in the California divorce proceedings in 2017 between the co-defendant and the plaintiff. The documents were not prepared by the plaintiff and were filed by the co-defendant only.
21To the extent that Sharia law was relied on, I have not considered same. There was no expert evidence before me concerning Sharia law.
22There is no issue that the defendant or the company that the defendant was a director of received USD $300,000.00 from the plaintiff. There is no issue that the defendant made monthly payments for a period of time thereafter. The defendant denies a loan from the plaintiff and denies that the monthly payments were interest payments on the loan. Credibility is at issue. For the purposes of this motion I am satisfied that the plaintiff has demonstrated that his action has a good chance of success with respect to the damages sought for the amount owing on the loan.
23The evidence before me also satisfies me that the plaintiff’s current financial circumstances are a result of the funds at issue in this action no longer being available to the plaintiff (see Yaiguaje at para. 24 and see paras. 48 and 57 of the plaintiff’s affidavit).
24Even if I was prepared to order security for costs, which I am not, the material before me does not satisfy me that the defendant has had to forego remunerable employment. The evidence does not satisfy me of any lost opportunity cost. There are no specifics in support of future estimated costs.
25The motion for security for costs is dismissed.
Costs
26The plaintiff was successful in opposing the defendant’s motion. I am satisfied that the plaintiff is entitled to costs of the motion including costs of the cross-examinations. The plaintiff claims costs on a partial indemnity basis the all-inclusive sum of $31,239.48. This amount includes a total of 204 hours of work for two lawyers, a student and a law clerk. Having regard to all of the circumstances of the motion and the relevant factors at Rule 57.01(1), the amount sought is too high. In my view the all-inclusive sum of $12,500.00 is a fair and reasonable amount that the defendant could expect to pay for costs of the motion.
27Although the defendant argues that he is impecunious and cannot pay costs of the motion, the defendant has also submitted that this motion needed to proceed as scheduled because he would be out of the country for the fall working in the US. The evidence before me does not satisfy me that the defendant is impecunious. I am, however, providing the defendant with more time to pay costs than the usual 30 days set forth at Rule 57.03(1). Costs of the motion are fixed in the all-inclusive sum of $12,500.00 payable by the defendant to the plaintiff within 90 days.
28The plaintiff also seeks costs of the plaintiff’s motion returnable June 18, 2018, which was a motion to adjourn the defendant’s motion for security for costs. Generally a separate motion is not required to adjourn a pending motion. The defendant ultimately agreed to adjourn the security for costs motion. I award no costs of the plaintiff’s motion returnable June 18, 2018.
Order
29Order to go as follows:
- The motion is dismissed.
- Costs of the motion are fixed in the all-inclusive sum of $12,500.00, payable by the defendant Payman Khanlari to the plaintiff within 90 days.
- There shall be no costs of the plaintiff’s motion returnable June 18, 2018.
Master B. McAfee
Date: September 10, 2018