Court File No.: CV-13-473552 Motion Heard: December 7, 2018 Superior Court of Justice - Ontario

Re: Elizabeth Omlewa Ogunlesi, Plaintiff And: Talon International Inc. and Anthony Olufola Ogunlesi, Defendants

And Between: Talon International Inc., Plaintiff by Counterclaim And: Elizabeth Omlewa Ogunlesi, Defendant by Counterclaim

Before: Master P.T. Sugunasiri

Counsel: Adetunji, B., for the Plaintiff/Defendant by Counterclaim/Moving Party Tourgis, N., for the Defendant/Plaintiff by Counterclaim/Responding Party

Heard: December 7, 2018

Reasons for Decision

Overview

[1] This action and its companion, CV-14-515666 are two of many relating to residential and hotel units in the development that was then known as the Trump International Hotel in Toronto. The within action is brought by Ms. Ogunlesi with respect to a failed transaction for a residential unit (“Residential Action”). Talon has counterclaimed against Ms. Ogunlesi in that action. The companion action is brought by Talon International Inc. (“Talon”) with respect to the unsuccessful sale of a hotel unit (“Hotel Action”).

[2] Ms. Ogunlesi brings a motion to amend her claim, consolidate this action with companion action CV-14-515666, and obtain an order for security for costs in both. Talon International Inc. (“Talon”) consents to having the actions tried together or one after the other as the trial judge sees fit, and amending the claim without prejudice to pleading any and all defences available to it. The only issues is security for costs. For the reasons that follow, I dismiss the motion for security for costs in CV-13-473552 and order Talon to post security in the amount of $10,000 in CV-14-515666.

Facts

The Parties

[3] Talon was a developer of the Trump International Hotel in Toronto. It is a defendant and plaintiff by counterclaim in the Residential Action. It is a plaintiff in the Hotel action. Talon’s real estate assets were sold pursuant to a court ordered receivership. However, Talon retained ownership of its counterclaim in the Residential Action and its claim in the Hotel Action.

[4] Ms. Ogunlesi and Anthony Ogunlesi migrated to Canada in 1999. Prior to their relocation here, they entered into two agreements with Talon for the purchase of two properties. One was a residential unit and one was a commercial unit in Trump International Hotel. Ms. Ogunlesi is a plaintiff and defendant by counterclaim in the Residential Action, and a defendant and plaintiff by counterclaim in the Hotel Action.

[5] At the time of entering into the agreements of purchase and sale, the Mr. and Ms. Ogunlesi were married. Since then they have separated and have matrimonial proceedings in Ontario and Nigeria. Mr. Ogunlesi has not been served with Talon’s Statement of Claim. He has been served with Ms. Ogunlesi’s claim by way of substituted service permitted by Master McAfee.

The Actions

[6] The parties entered into an Agreement of Purchase and Sale dated February 13, 2005 for the purchase of the hotel unit (“Hotel APS”). On March 10, 2005 the parties entered into an Agreement of Purchase and Sale for the residential unit (“Residential APS”).

[7] Multiple deposits were made under the Hotel APS and the Residential APS by November of 2009. Several extensions to the closing date for the units were made on consent. Further extensions were made unilaterally by Talon. Still other extensions were requested and granted as a result of matrimonial proceedings between the Ogunlesis. Mr. Ogunlesi had brought motions to compel Ms. Ogunlesi to release funds to facilitate the closing of both units.

[8] Ultimately, the units did not close. Both sides allege defaults on the part of the other. On January 28, 2013, Talon advised the Ogunlesis that it was terminating the Residential APS and retaining the deposits. On February 5, 2013, Ms. Ogunlesi commenced the Residential Action.

[9] On April 9, 2013 Talon defended the Residential Action and also brought a counterclaim.

[10] On November 6, 2014, Talon commenced the Hotel Action. Ms. Ogunlesi defended the Hotel Action and brought a counterclaim against Talon.

The Residential Action

[11] Ms. Ogunlesi’s sole claim relates to her deposit on the residential unit. She seeks a declaration that Talon breached the Residential APS and that she is entitled to the return of her deposit in the amount of $1,354,900.00. Other relief in the prayer for relief relates to the deposit. Talon’s counterclaim is simply for the opposite declaration that it is the Plaintiff who failed to complete the Residential APS. The details of that alleged failure is set out in Talon’s Statement of Defence.

[12] I note that Talon also seeks damages against Ms. Ogunlesi in its counterclaim. At the return of the motions, Ms. Tourgis advised that Talon is not pursuing the damages claim and she so confirmed by way of letter dated December 11, 2018.

The Hotel Action

[13] In the Hotel Action, Talon seeks a declaration that the Ogunlesis have breached the Hotel APS and that they have forfeited their deposits. It also seeks damages of $750,000 for loss of expected income and other out of pocket expenses to be detailed at a later date.

[14] In her both her defence and counterclaim, Ms. Ogunlesi alleges that Talon breached the Hotel APS, made pre-construction misrepresentations, and colluded with her husband to deprive her of her interest in her matrimonial home. She repeats and relies on these allegations in her counterclaim and seeks the return of her deposit and damages for conspiracy, misrepresentation and mental distress.

[15] The actions have proceeded together. Talon’s discoveries are complete subject to the provision of some undertakings. Ms. Ogunlesi’s discovery has not been completed. The parties have also had a mediation which unfortunately failed to settle the actions.

Law and Analysis

The Residential Action

[16] Ms. Ogunlesi seeks security for costs against Talon in this action because Talon is a plaintiff by counterclaim. She cannot seek such costs against Talon as a defendant ( Toronto-Dominion Bank v Szilagyi Farms Ltd., 1988 CarswellOnt 429 at 21). This is also implicitly codified in Rule 56.01 of the Rules of Civil Procedure which states:

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;

(b) the plaintiff or applicant has another proceeding for the same relief pending in Ontario or elsewhere;

(c) the defendant or respondent has an order against the plaintiff or applicant for costs in the same or another proceeding that remain unpaid in whole or in part;

(d) the plaintiff or applicant is a corporation or a nominal plaintiff or applicant, and there is good reason to believe that the plaintiff or applicant has insufficient assets in Ontario to pay the costs of the defendant or respondent;

(e) there is good reason to believe that the action or application is frivolous and vexatious and that the plaintiff or applicant has insufficient assets in Ontario to pay the costs of the defendant or respondent; or

(f) a statute entitles the defendant or respondent to security for costs. R.R.O. 1990, Reg. 194, r. 56.01 (1).

(2) Subrule (1) applies with necessary modifications to a party to a garnishment, interpleader or other issue who is an active claimant and would, if a plaintiff, be liable to give security for costs. R.R.O. 1990, Reg. 194, r. 56.01 (2).

[17] It is also well established in Szilagyi Farms Ltd. supra, that where a counter-claim arises out of the same transaction or circumstances as the claim and the counter-claim is in substance a defence to the claim, security for costs will not be ordered.

[18] Here, I have no hesitation in concluding that the counterclaim is so inextricably caught up with the claim that there should be no order of security for costs against Talon. The action, defence and counterclaim raises a very simple question as to who is entitled to the deposits made on the residential unit.

The Hotel Action

[19] The Hotel Action is broader than the Residential Action. Talon seeks to retain the deposits made and claims damages in the amount of $750,000. Talon agrees that if it falls within one of the enumerated categories in Rule 56.01(1), the Court then exercises its discretion to determine if an order for security for costs is just. Recently in Yaiguaje v Chevron Corporation, 2017 ONCA 827, the Court of Appeal stated at paragraph 25 that:

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 for in the Rules. 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.

[20] In the present case, I am satisfied that pursuant to Rule 56.01(1)(d), Talon is a corporation and that there is good reason to believe that it has insufficient assets in Ontario to pay Ms. Ogunlesi’s costs. Talon is in receivership and its major asset, the Trump Tower, was sold on March 30, 2017.

[21] Talon does not, however, use impecuniosity to resist a security for costs order. Instead, it states that:

a. It is primarily a defendant; b. It was Ms. Ogunlesi that first pointed the litigation finger; c. Talon’s defences and claims are based on contemporaneous written documents; d. It has a high probability of success; e. It’s documents are straightforward and will not complicate the trial; and f. It is Ms. Ogunlesi’s allegations of conspiracy that threaten to complicate the trial.

[22] None of these factors preclude an award of security for costs against Talon. Most of them speak to quantum rather than entitlement. Talon also urges that I take into consideration the timing of these motions which come after discoveries and mediation.

[23] Ms. Ogunlesi provided a draft bill of costs. She seeks approximately $45,000 including disbursements up to the end of trial. Some of this amount includes fees already incurred for the drafting of pleadings and discovery. I do not agree that security for costs must only be prospective. I was provided with no authority for such a proposition.

[24] I do agree, however, that the proposed amount is too high for a straightforward action on a failed APS. It is Ms. Ogunlesi’s allegations of conspiracy and misrepresentation that launches this case into another costs dimension. That should not be borne by Talon. I am also reluctant to award security for costs to the end of trial in the hopes that the action can be settled before that.

[25] In light of all the circumstances, it is just to order security for costs in the amount of $10,000 to the end of pre-trial, without prejudice to Ms. Ogunlesi seeking further security for costs for a trial.

Disposition

[26] For the foregoing reasons, I make no order of security for costs in CV-13-473552 and order Talon to post $10,000 as security for costs to the end of pre-trial in CV-14-515666.

[27] Ms. Ogunlesi also requested an order “providing directions for further continuation of the actions…” The parties did not address this at the return of the motion and I consider this part of the motion abandoned.

[28] These reasons shall be filed in both court files CV-13-473552 and CV-14-515666.

Costs

[29] I urge the parties to resolve costs on their own. If they cannot, the parties shall first exchange costs outlines to understand each other’s costs position and then deliver any submissions of no more than three-pages double-spaced along with the costs outlines within 30 days of today’s date. They may file these at the Masters’ Administration on the 6th floor of 393 University Avenue.

Original signed Master P. Tamara Sugunasiri Date: March 20, 2019