Court File and Parties

COURT FILE NO: 17-74784 DATE: July 28, 2020 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: WILSON, YOUNG & ASSOCIATES INC., Plaintiff - and - CARLETON UNIVERSITY and 2017 INTERNATIONAL CONFERENCE AND EXHIBITION ON URBAN SECURITY AND RESILIENCE STEERING COMMITTEE and URBAN SECURITY AND RESILIENCE CONFERENCE AND EXHIBITION CORP. c.o.b. INFRASTRUCTURE RESILIENCE RESEARCH GROUP STEERING COMMITTEE, Defendants

BEFORE: Master Marie Fortier

COUNSEL: Natalie Scott, counsel for the Plaintiff Raymond Murray, counsel for the Defendants, Infrastructure Resilience Research Group Steering Committee, Felix Kwamena Jenna Anne de Jong, counsel for the Defendant/Moving Party, Carleton University

HEARD: February 20, 2020

Reasons for Decision

Introduction

[1] The defendants Carleton University (“Carleton”) and Urban Security and Resilience Conference and Exhibition Corp. c.o.b. Infrastructure Resilience Research Group Steering Committee (the “Steering Committee”) have each brought motions for security for costs against the plaintiff Wilson Young & Associates (the “plaintiff“) pursuant to rule 56.01(1) of the Rules of Civil Procedure, R.R.O.1990, Reg. 194.

Background

[2] The plaintiff is a company that carries on business as an event planner and manager delivering conferences, trade shows, workshops, and other special events. Ian Garland is the plaintiff’s principal.

[3] The defendant, Carleton, is an institution offering post-secondary study in the City of Ottawa.

[4] The defendant, the Steering Committee, is a committee that was created in March 2015 to run, manage and administer a conference called “the International Conference on Urban Security and Resilience” (“the Conference”) which was to be held in May 2017.

[5] By way of background, in 2013, Carleton’s Dean of Engineering and Design in collaboration with Carleton’s Dean of Public Affairs created a group called “the Infrastructure Resilience Research Group” (“IRRG”) to convene national conferences and specialized forums.

[6] In 2014, the IRRG, led by its special advisor, Dr. Felix Kwamena, an adjunct professor at Carleton, planned to convene the Conference as part of the IRRG’s initiative in 2017. As outlined above, the Steering Committee was to administer the Conference.

[7] The Steering Committee released a Request for Proposal (“RFP”) to solicit proposals from contractors to manage the Conference in May 2015. The RFP outlined that the successful company had to be willing to cover its expenses until the conference generated revenues.

[8] The plaintiff was awarded the RFP and the Event Planner Contract (the “Contract”) was signed by the parties on November 30, 2015.

[9] Just over eight months later in August 2016, Ian Garland wrote to the Steering Committee terminating the Contract and attaching two invoices for services rendered. According Mr. Garland, he terminated the contract because of difficulties encountered in getting instructions, decisions and approvals from the Steering Committee.

[10] According to the Steering Committee, it was left in a position of not having an event planner just months before the Conference was scheduled to take place in May 2017 and it was forced to attempt to rectify the situation themselves.

[11] The conference was held in Toronto on May 16 – 19, 2017 and had a loss, after expenses, of $254,494.62.

[12] The plaintiff commenced the within action in December 2017 against the defendants claiming damages in the sum of $72,645.44 for breach of contract and negligence. Carleton filed a statement of defence in the main action and crossclaimed against the Steering Committee for contribution and indemnity. The Steering Committee filed a statement of defence and counterclaim as well as a defence to the crossclaim. Examinations for discovery have been completed and mediation was held in August 2019.

[13] Carleton denies that it entered into the contract with the plaintiff stating that it was neither a party nor a signatory to the Contract. Carleton denies that it had any responsibility for the acts or omissions of the Steering Committee and denies that it owed the plaintiff a duty of care.

[14] The Steering Committee pleads that the plaintiff is not entitled to any moneys in relation to fees and expenses because it failed to seek or obtain approval for fees and expenses. Moreover, the plaintiff was to be paid based on its solicited attendees and revenues generated from the conference. The plaintiff failed to solicit any attendees for the conference and no revenues were generated – in fact there was a net loss. As a result, no money is owed to the plaintiff.

Procedural Objections

[15] The plaintiff raises two procedural objections to Carleton’s affidavit material, which will be dealt with prior to the merits of the motions for security for costs.

Affidavit of Tony Lackey

[16] In support of its motion for Security for Costs, Carleton filed the affidavit of Tony Lackey, Director of Risk and Insurance at Carleton University.

[17] The plaintiff seeks to have Mr. Lackey’s affidavit struck arguing that the affidavit contains information provided by Carleton’s counsel and accordingly, the information is hearsay and proffers the opinion of counsel for Carleton, rather than the party itself. The plaintiff submits that if counsel for Carleton is the only individual with the information deposed, counsel for Carleton ought to have sworn the affidavit in question, and Carleton should retain a new lawyer.

[18] For the reasons that follow, Mr. Lackey’s affidavit is admitted, to be given the appropriate weight.

[19] Mr. Lackey’s affidavit is eleven paragraphs in length with nine exhibits attached. The exhibits include a number of searches, screen captures of the plaintiff’s website, one e-mail exchange between counsel and Carleton’s Costs Outline in support of the amount of security for costs sought from the plaintiff.

[20] Although Mr. Lackey refers to documents that were provided to him by counsel in several paragraphs of his affidavit, in my view, Mr. Lackey’s affidavit was largely confined to placing certain documents on the record. I do not agree with the plaintiff that the affidavit contains the opinion of counsel.

[21] The plaintiff also objects to the affidavit arguing that it contains hearsay.

[22] In paragraph 1 of his affidavit Mr. Lackey states that “I have had significant involvement in this litigation on behalf of Carleton, including regularly instructing counsel. I accordingly have knowledge of the matters to which I herein depose. Where I do not have personal knowledge of a fact, but make a statement based on information and belief, I indicate the source of information and hereby confirm that I believe that information to be true.”

[23] Evidence based on information and belief is admissible on a motion pursuant to Rule 39.01 (4) provided that the source of the information and belief is clearly identified. This, of course, is subject to the weight that it may or may not be given. As stated by Master MacLeod (as he then was), in Mapletoft v. Christopher J. Service [1]:

By virtue of Rule 39.01 (4) evidence based on information or belief is admissible on a motion but that does not mean it will be given undue weight nor that adverse inferences may not be made.

[24] I am satisfied that Mr. Lackey identified his source of information and belief.

[25] It must be kept in mind that the decision concerning who should swear an affidavit is, subject to compliance with the Rules, a tactical decision as are considerations of convenience, cost effectiveness and efficacy. [2] I am satisfied that not only did Mr. Lackey identify his source of information and belief but the decision to have Mr. Lackey swear the affidavit in support of the motion was appropriate in the circumstances.

Affidavit of Stephanie Nehring

[26] Carleton filed a “Reply Motion Record” containing the affidavit of Stephanie Nehring, a legal assistant for Carleton’s lawyers. Attached as an exhibit to Ms. Nehring’s affidavit is a copy of a heavily redacted, “without prejudice” e-mail from counsel for the plaintiff to counsel for both defendants, dated July 8, 2019, evidently containing settlement discussions.

[27] There is one unredacted paragraph in the e-mail, containing information about the operation of the plaintiff corporation, which Carleton argues, contradicts a statement made in paragraph 30 the plaintiff’s factum. In short, Carleton submits that the e-mail indicates that the plaintiff corporation closed in late 2017, whereas the evidence on the motion is that the plaintiff’s business is ongoing with recent contracts.

[28] Counsel for the plaintiff argues that the letter is protected by settlement privilege and therefore inadmissible whereas counsel for Carleton contends that the redacted letter is admissible as an exception to settlement privilege.

[29] For the reasons that follow, I find that the letter is protected from disclosure by settlement privilege and is therefore inadmissible.

[30] Settlement discussions are presumed to be private and settlement is a class privilege. The Supreme Court of Canada in Sable Offshore Energy Inc. v. Ameron International Corp. [3] recognized that without such protection parties would be unwilling to settle matters without a trial.

[31] Communications are protected from disclosure by settlement privilege if: a) there is a litigious dispute, b) the communications were made with the express or implied intention that they would not be disclosed, and c) the purpose of the communications is to attempt to achieve a settlement. [4]

[32] In my view, and conceded by the defendants, the redacted e-mail satisfies all the above requirements in that there is a litigious dispute, the letter was made with the express or implied intention that it would not be disclosed, and the purpose was clearly to attempt a settlement.

[33] The next question is whether an exception to settlement privilege applies.

[34] Settlement privilege can be overcome if a party shows that on balance, a competing public interest outweighs the interest in encouraging settlements. These countervailing interests include allegations of misrepresentation, fraud or undue influence, [5] or if the otherwise privileged evidence would act “as a cloak for perjury or other unambiguous impropriety”. [6]

[35] Carleton relies on the 2017 decision of the Supreme Court of British Columbia in Nguyen v. Dang [7] where the court cited with approval the case of Livingston v. I.M.W. Industries Ltd. [8]. In Livingston, the court found that a heavily redacted copy of a proposed settlement agreement between the parties that contradicted information in the defendants’ affidavit was admissible as an exception because privilege cannot be used as a means to deceive the courts as to the facts. As held in Livingston at para 29:

[29] It is certainly arguable that the document and the communications related to it attract settlement privilege, but that privilege is subject to exceptions where “competing public interests” are at play. In particular, it has been held that privilege cannot be used to mislead the court as to the facts of the case and that admissions by a party in settlement correspondence which are inconsistent with other facts or evidence produced by that party to the court can be admitted into evidence as an exception to the privilege...

[36] In my view, there is no evidence before me of an attempt by the plaintiff to mislead the court as to the facts of this case. Rather, the e-mail of July 8, 2019 can be read as meaning that either the plaintiff corporation closed in late 2017 or, “but for” this litigation, the business would have closed in late 2017. It is important to note that the e-mail also indicates that there have been costs associated with the “unplanned continued operation” of the plaintiff.

[37] A court’s determination whether to recognize an exception involves a balancing exercise, assessing whether the public interest in recognizing an exception outweighs the strong public interest in promoting settlement by protecting the confidentiality of settlement negotiations. Settlement privilege should only be waived in clear cases of abuse. In my view, this is not such a case – there is no evidence of a competing public interest that outweighs the interest in encouraging settlements. Accordingly, I find that settlement privilege applies to the e-mail of July 8, 2019 and it is therefore inadmissible.

Security for Costs

Position of the Parties

[38] Both defendants seek an order for security for costs arguing that there is good reason to believe that the plaintiff corporation has insufficient assets to pay the defendants costs. The Steering Committee also submits that the plaintiff has brought multiple claims seeking the same relief.

[39] The plaintiff opposes the motions, arguing that the defendants have not established a good reason to believe that the plaintiff has insufficient assets and they have failed to produce adequate evidence to require the plaintiff to post security for costs. Further, the plaintiff denies that it has multiple proceedings against the Steering Committee and states that it was prejudiced by the Steering Committee’s delay in bringing the motion.

Disposition

[40] For the reasons that follow, the defendants’ motions are dismissed.

The Law and Analysis

[41] Rule 56.01 sets out the circumstances in which a court can order security for costs. For the purposes of this motion the relevant subparagraphs are 56.01 (1) (b) and (d) which provide that on a motion by a defendant, the court may make an order for security for costs “as is just where it appears that”:

(b) the plaintiff has another proceeding for the same relief pending in Ontario or elsewhere; (d) the plaintiff is a corporation and there is good reason to believe that the plaintiff has insufficient assets in Ontario to pay the costs of the defendant.

[42] Rule 56.01 sets out the following two step inquiry to determine whether an order for security for costs is appropriate:

a) the defendant must show that it appears that the plaintiff falls within one of the circumstances set out in Rule 56.01. b) If the defendant meets this onus, the court must decide whether would it be just to make an order for security for costs.

[43] If the defendant meets the initial onus, the onus then shifts to the plaintiff to show either that it has sufficient assets available to respond to any costs order, to demonstrate impecuniosity or to ask the court to make such order as is just in the circumstances. [9]

A- Rule 56.01 (1) (d) The Plaintiff is a Corporation and There is Good Reason to Believe that the Plaintiff has Insufficient Assets in Ontario to Pay the Costs of the Defendant.

[44] On a motion for security for costs under rule 56.01 (d), the defendant is not required to prove that the corporate plaintiff has insufficient assets, but rather must show that there is “good reason” to believe that the corporation has insufficient assets. [10]

[45] The defendants rely on the following evidence and allegations to show that it satisfied the threshold in establishing that there is “good reason to believe” that the plaintiff corporation has insufficient assets in Ontario to pay their respective costs:

a) The plaintiff has ceased operating because it has stopped advertising publicly, has not listed any successful bids in the past two years and has no listed assets on the PPSA registry. b) Screen captures of the plaintiff’s “Landing Page,” “News,” and “Client Highlights” webpages of plaintiff’s website, http://www.wilson-young.com/eng/news.asp, show: i- The landing page describes an event to be held in September 2014 to be “upcoming”; ii- The “News” page describes the “recent” activities of the company. The most recent activity described is the awarding of an ongoing contract for Professional Event Management Services to the Government of Canada, which ended in 2017; iii- On the “Client Highlights” webpage, the most recent addition was for an event in 2014; iv- Plaintiff’s counsel did not respond to Carleton’s counsel’s inquiry as to whether the plaintiff had available assets to satisfy an adverse cost award.

[46] The plaintiff’s evidence is that it is an operational corporation, with no unpaid judgments, no active writs and up to date corporate filings. Mr. Garland deposed that the plaintiff corporation has ongoing contracts, and that its website is not necessarily an accurate reflection of the plaintiff’s contracts as many of its clients prefer not to have contracts publicly published on supplier websites. Counsel for the plaintiff argues that there is no evidence before the court to suggest that the plaintiff corporation is inactive.

[47] Even though the onus on a motion for security for costs under rule 56.01 (1) (d), is a reduced one, the defendant must nevertheless provide enough information about the corporation to raise a belief of insufficiency that “goes beyond mere conjecture, hunch, or speculation”. The Defendants must show “indicia of insolvency” or “instability, “such as a failure to make corporate filings, unpaid judgments or liabilities, a temporary dissolution, a significant disposition of assets” or a shell company. [11]

[48] In my view, the evidence provided by the defendants in support of their motion under rule 56.01 (1) (d) does not rise above “mere, conjecture, hunch or speculation”. There is no indicia of insolvency or instability. Rather, there is evidence that the plaintiff does not have unpaid judgments, active writs and is up to date in its corporate filings. Accordingly, I do not find that the defendants have met their onus to show that there is “good reason” to believe that the plaintiff corporation has insufficient assets.

B- Rule 56.01 (1) (b): The Plaintiff has Another Proceeding for the Same Relief Pending in Ontario

[49] This action is one of three actions that the plaintiff has brought in relation to the Contract. The other two proceedings include an action brought against Carleton in March 2017 for damages in the sum of $72,645.44 for breach of contract, negligence and unjust enrichment arising from the contract and another action in August 2018 against the individual members of the Steering Committee for damages in the sum of $72,645.44.

[50] Although the plaintiff indicated that it planned to discontinue claims against all committee members except for the defendant Dr. Felix Kwamena in the August 2018 action, it has yet to do so. Dr. Kwamena has delivered his statement of defence.

[51] A review of the pleadings shows that the relief sought by the plaintiffs in all three proceedings is the same.

[52] Based on the above, the Steering Committee submits that it has satisfied its onus to show that the plaintiff has brought multiple claims seeking the same relief.

[53] The plaintiff contends that the Steering Committee is not the subject of more than one action commenced by it and therefore the Steering Committee has failed to meet its onus.

[54] I do not agree with the plaintiff’s submissions that more than one action has to be commenced against the same defendant for Rule 56 (1)(b) to apply. Where a plaintiff has commenced multiple proceedings, the defendant is only required to show that the plaintiff has started another proceeding for the same relief (emphasis added) to satisfy the first step. Rule 56.01 (1) (b) does not require that the relief be sought against the same defendants. [12]. Accordingly, in my view, the Steering Committee has met its onus under rule 56.01 (1) (b).

[55] The onus now shifts to the plaintiff to show either that it has sufficient assets available to respond to any costs order, to demonstrate impecuniosity or to ask the court to make such order as is just in the circumstances.

[56] While the court has broad discretion and each case must be considered on its own facts, the following are factors for the court to consider when determining whether an order for security for costs is “just”:

a) The merits of the claim; b) The delay in bringing the motion; c) Whether the conduct of the defendants have had an impact on the available assets of the plaintiff; d) Access to justice concerns; e) The public importance of the litigation. [13]

[57] Although the plaintiff does not take the position that it is impecunious, it has not produced evidence of its assets beyond a copy of the first page of a June 2019 contract with the Canada Border Services Agency and the assertion that one of its significant assets is the account receivable in the sum of $72, 645.44 plus interest allegedly owing to it by the defendants in this action. Based on this evidence, I do not find that the plaintiff has met its onus to show that it has sufficient assets available to respond to a costs order.

[58] The plaintiff argues however that an order for security for costs would be unjust because:

a) The Steering Committee has delayed bringing this motion; b) The plaintiff’s claim has a good chance of success and the defendants are indebted to the plaintiff for the amount of the claim; c) The defendants have commenced a counterclaim and crossclaim which add further issues to be decided in this Action;

Delay

[59] The principles to be applied when considering the effect of a moving party’s delay in bringing a motion for security for costs can be summarized as follows:

a) A motion for security for costs must be brought promptly by the defendant upon discovering that it has a reasonable basis for bringing the motion. A plaintiff ought not be placed in the position of having to post security for costs after having incurred significant expense in advancing the lawsuit. b) The moving party should not be entitled to an order for security for costs if there is evidence that the delay in bringing the motion caused prejudice to the plaintiff. c) Even in the absence of prejudice to the plaintiff, a failure by the moving party to provide an explanation for the delay is fatal to the motion. [14]

[60] The Steering Committee has not provided any evidence on the motion as to when it first discovered that it had a reasonable basis for bringing this motion pursuant to Rule 56.01 (1) (b). It would appear reasonable however, to infer that the Steering Committee ought to have been aware of the multiple proceedings upon being served with the statement of claim in this action, or at the latest when the members of the Steering Committee were served with the statement of claim issued in August 2018. Discoveries have been completed and mediation has been held. The proceeding has been set down for trial and the parties are awaiting a date for a pre-trial. I therefore conclude that the Steering Committee did unduly delay in bringing the motion.

[61] The plaintiff argues that it is prejudiced by the delay in bringing this motion as all interlocutory proceedings gave been completed and the action is ready for trial. I accept this submission. As held in Charron v. MacDonald:

“Where a defendant believes that he is entitled to an order for security for costs, he should move at the earliest possible moment in order that the plaintiff may know whether or not he will be required to give security and to prevent him from proceeding at very considerable expense down to trial and then find himself faced with an order for security with which he is unable to comply.

By reason of the delay of the defendant MacDonald in making his application for security, the plaintiff has gone to the expense of bringing the action down to the eve of trial when she is faced with this application for security for costs. She should not be prevented at this late date from going to trial even if the material should be sufficient to warrant an order for security.”

[62] The Steering Committee has not provided any evidence of a reasonable explanation for the delay in bringing the motion. Therefore, even in the absence of clear prejudice, failure by the Steering Committee to provide an explanation for the delay is fatal to its motion.

[63] In light of my decision in this regard, I decline to comment on the merits of the plaintiff’s claim.

[64] The motions for security for costs are therefore dismissed. However, the existence of several actions in which the plaintiff is claiming essentially the same relief is problematic. I therefore direct the parties to schedule a case conference so that this problem can be addressed.

[65] If counsel cannot agree on costs, they may file written submissions not exceeding three pages, exclusive of their respective bills of costs. Counsel for the plaintiff shall file her costs submissions within 20 days of the release of this decision. The cost submissions of counsel for the defendants shall be filed within 10 days thereafter.

Master Marie Fortier

Footnotes

[1] Mapletoft v. Christopher J. Service at para. 11. [2] Mapletoft at paras. 9 and 11. [3] Sable Offshore Energy Inc. v. Ameron International Corp., 2013 SCC 37 [4] Re Hollinger Inc., 2016 ONCA 761 at para. 16. [5] Sable Offshore Energy Inc. v. Ameron International Corp., 2013 SCC 37 at para. 19. [6] Nguyen v. Dang, 2017 BCSC 1409 at para. 24. [7] Nguyen v. Dang, 2017 BCSC 1409 at para. 31. [8] Livingston v. I.M.W. Industries Ltd., 2015 BCSC 1627 [9] John Wink Ltd. v. Sico Inc., 1987 Carswell ONBT 370, 57 O.R.(2d) 705 at para. 31. [10] Hallum v. Cdn. Memorial Chiropractic College, 1989 CarswllON896, 70 O.R. (2d) 199 at para. 13. [11] Yuanda Canada Enterprises Ltd. v Pier 27 Toronto Inc, 2017 ONSC 1892 at para. 15; City Commercial Realty (Canada) Ltd v. Bakich, 2005 ONCA 6443 [2005] O.J./ No. 6443 (Ont. C.A.). [12] Maple Leaf Racquet Court Inc. v. Beaver Engineering Ltd.. [13] Yaiguaje v. Chevron Corporation, 2017 ONCA 827, paras. 24 and 25. [14] Pelz v. Anderson, 2006 ONSC 5726 [2006] OJNo5726 at para. 23.