Volgemut v. Decristoforo, 2021 ONSC 3543

Court File and Parties

COURT FILE NO.: FC-20-2071

DATE: 2021/05/14

SUPERIOR COURT OF JUSTICE – ONTARIO

RE: Taras Volgemut, Applicant

AND

Ashlee Janna Decristoforo, Respondent

BEFORE: Mackinnon J.

COUNSEL: Michael Stangarone, for the Applicant

Katherine Cooligan, for the Respondent

HEARD: April 20, 2021

ENDORSEMENT

1Should the applicant, a non-resident of Ontario with no assets here, be required to post security for costs prior to the trial of his application for the return of the parties’ child to the jurisdiction from which he alleges the child was wrongfully removed? The respondent’s motion for this relief is brought pursuant to the Family Law Rules, O.Reg. 114/99 as am, r 24(13):

(13) A judge may, on motion, make an order for security for costs that is just, based on one or more of the following factors:

1. A party habitually resides outside Ontario.

2. A party has an order against the other party for costs that remains unpaid, in the same case or another case.

3. A party is a corporation and there is good reason to believe it does not have enough assets in Ontario to pay costs.

4. There is good reason to believe that the case is a waste of time or a nuisance and that the party does not have enough assets in Ontario to pay costs.

5. A statute entitles the party to security for costs.

2Since only one enumerated factor is required, and the first is conceded, the motion turns on whether it is just to make the order for security for costs.

3The parties met in New York City. The applicant is a Russian citizen with international business interests. The respondent was born and raised in Ottawa. She was working in New York when they met. They lived together for six years, in Cape Town, Munich, Bodrum and most recently in Dubai, United Arab Emirates. The applicant gave up her employment to move with the applicant and became financially dependent on him. Their daughter was born in Munich. She is now two years old. In December 2020, the respondent left Dubai and came with the child to Ottawa where her parents still reside. She alleges she fled after the applicant subjected her to a brutal beating. He denies this and alleges that on the evening in question the respondent was intoxicated, assaulted his adult daughter, and then left surreptitiously with the child, under cover of darkness.

4It is clear that the child’s habitual residence was in Dubai, where she lived with both parents. The respondent did remove her from that jurisdiction to Ontario without the father’s consent. The applicant’s case disputing Ontario’s jurisdiction and seeking the child’s return to Dubai is not frivolous or without merit. Nor has he breached any court order made in this case.

5Against this backdrop the applicant seeks dismissal of the motion. The following reasons explain why in the exceptional circumstances of this case it is just to make an order for security for costs.

Discussion of Authorities

6Ontario courts are justifiably cautious in ordering security in parenting cases. As stated in Izyuk v. Bilousov, 2015 ONSC 3684 at para [41]:

41A common theme in the case law suggests security for costs in custody and access cases should only be ordered in exceptional circumstances. Kaiser v. Wein 2014 ONSC 752; Daviau v. Husid 2014 ONSC 3188; Parham v. Jiang 2014 ONSC 3293. The traditional rationale:

a. The best interests of children are always paramount.

b. Courts should not allow the outcome in children’s lives to be determined by a party’s financial resources, or inability to post security for costs.

c. Despite any deficiency or non-compliance by a parent, courts are better able to address sensitive children’s issues if both parties participate in the process and provide valuable information. Kovachis v Kovachis 2013 ONCA 663; Purcaru v Purcaru 2010 ONCA 92.

d. These concerns may be particularly applicable where custody or access are being determined in the first instance (as opposed to a motion to change, where the issues may be narrower, and where the moving party has the threshold onus to establish a material change in circumstances).

7Many decided cases focus on the impact a security order would have on the parent against whom it is sought. Regardless of whether a parent is resident in Ontario or not our courts do not want to prevent the merits of a case from being heard due to limited financial means. See for example Bragg v. Bruyere, 2007 ONCJ 515 at para 5. Where a parent is of limited or modest means, has a case that is not frivolous and has not breached any court orders, a court may well find that it would not be just to order security for costs simply on the basis that the parent is not resident in Ontario and has no assets here. See for example Daher v. Khanafer, 2016 ONSC 1387; Dhillon v. Dhillon, 2008 CanLII 66140 (ONSC).

8So too where a litigant, whether resident in Ontario or not, has not complied with an order to pay costs and is pursuing a very weak case, security is more likely to be ordered. McGraw v. Samra, 2004 ONCJ 164 was a case where an order for security for costs had already been made against Samra in a matter he had before the court. He sought to set aside that order so he could bring a different matter to court. The motion judge adjourned her determination of that particular issue to receive submissions on the unargued point of whether the security order applied to the proposed case. In that context and in the factual context of the case before her she expressed these views at para 24:

24That said, the Family Law Rules read as a whole yield the unmistakable intention of the Family Rules Committee that litigants not be permitted to use the court as a playground. The “security for costs” remedy is but one of a number of remedies provided by the rules to stop a case in its tracks until the party veering outside of the rules brings himself or herself into line with them. It is a control on a blithe pursuit of another person in the courts without attention to the merits of the pursuit and the legal costs likely to be incurred by the respondent to defend the case. It is a remedy built on the principle that court proceedings are expensive and time consuming and not to be launched frivolously or without due regard to the impact on the responding party.

9McGraw is not authority for the proposition that security may not or will not be ordered except where a party has breached the rules, and is litigating frivolously and without regard to costs being occasioned to the other party. Put another way, the second and fourth criteria in r 24(13) may well result in security being ordered, as was the outcome in Daviau v. Husid, 2014 ONSC 3188, but those two criteria are not required to be present in every case which will warrant a security order.

10In Wall v. Horn Abbot Ltd., 1999 CanLII 7240 (NSCA) Cromwell JA (as he then was) explains the rationale behind each of the criteria in the Nova Scotia security for costs rule. The rationale for the inclusion of non-resident status is found at para 54:

54One such factor is whether the plaintiff or the persons for whose benefit the litigation is being pursued are artificially insulated from the risk of a costs award. For example, plaintiffs who are not resident in the jurisdiction are mentioned in Rule 42.02(1)(a) and (b). Orders for security against such plaintiffs have a long history (see Launer v. Sommerfeld (1964), 1964 CanLII 444 (BC SC), 48 W.W.R. 224 (B.C.S.C.). Their rationale was that an unsuccessful “foreign” plaintiff, if ordered to pay costs, would not be “in reach” of the Court for the service of process in relation to costs: see Mark Orkin, The Law of Costs (2nd, 1998) at section 503.

11This does not mean that establishing that the applicant is not habitually resident in Ontario gives the respondent an automatic entitlement to a security order. Before exercising the judicial discretion to order security the court must be satisfied that it is just to do so. I refer again to Wall at para 82 where the importance of access to justice is underlined:

82… Even where the defendant is prima facie entitled to security, the courts are reluctant to order it if the plaintiff establishes that the order will, in effect, prevent the claim from going forward. As Reid, J. put it in John Wink Ltd., supra, the danger of wrongly destroying a claim is a greater injustice than allowing an unmeritorious claim to go to trial. ….

12Daji v. AlNaser, 2017 ONSC 3541 is an example of a case where security was not required from an appellant who did not reside in Ontario even though he had not paid the costs awarded against him for the trial and his appeal was described not raising serious issues for determination. Two reasons were provided. There was little evidence as to how the amount claimed was arrived at, and second so that the appeal should not be determined by default, i.e. nonpayment of security for costs.

Analysis of this case

13The discretion whether to award security for costs is exercised on a case by case analysis: Majeed v. Chaudhry, 2015 ONSC 6014, at para 27.

14This is not a case where the merits will be determined by the applicant’s inability to post security for costs. To the contrary not ordering security for costs is far more likely to impede the respondent’s ability to pursue the case on the merits than the reverse. Her sworn financial statement shows she has no income and a net worth of $238,440. Of that, $160,000 is tied up in a motor vehicle purchased for her by the applicant that remains in Dubai. The respondent is unemployed. Since her arrival in Ontario her parents have been assisting her financially. The applicant has provided her $14,000 for support for their child.

15The respondent describes the applicant as a multi-millionaire. She detailed the extravagant lifestyle they enjoyed together. The applicant did not provide much financial information. He acknowledges owning a 40 percent interest in a global investment company registered in the UAE, which company owns 50 percent of a leasing corporation engaged in the airline industry. He has three bank accounts in Dubai, (balances not disclosed), and no real estate there. Because of the pandemic related decline in the airline industry he says his income this year will be confined to his salary, but he did not disclose his salary.

16I infer that an order for security would not prevent the applicant from proceeding in Ontario based on the respondent’s evidence and on the applicant’s own choice to provide such limited financial information to the court. Wreggbo v. Vinton, 2013 ONCJ 250 at paras 35,36 and Perron v. Perron, 2011 ONCA 776 at para 24 are cases where similar inferences were drawn.

17The applicant says he will pay any costs ordered against him and that such an order could readily be enforced in Dubai. These statements, if true, also support an inference of ability to post security. And while he has shown a legal path to enforcing an Ontario order in Dubai, given that he has no real property there, only bank accounts that are easily closed and moved, it is appropriate to consider whether, given the respondent’s limited financial circumstances, it is just to expose her to the risk of unpaid costs if she is successful and the costs awarded are not voluntarily paid, or whether it is just to order security for her costs. Exposure to the risk of unpaid costs was one factor considered in Perron (security for costs ordered in relation to an appeal.) Other factors supporting the security order were present in Perron that are not present here, but there are other factors here that were not present in Perron. The very significant financial imbalance between the parties is one. The very mobile lifestyle funded by the applicant during cohabitation is another, particularly in light of the ease with which his known liquid assets could be moved.

18This has already been a very expensive case. Since the application commenced in December 2020, twenty seven affidavits have been delivered. Five expert reports have been exchanged, with one more reply report to come from the respondent. The respondent’s legal fees and disbursements to date have been documented in the amount of $120,000. The applicant’s fees are not known but he has retained two lawyers in Toronto and one in Ottawa.

19A two week trial is scheduled to start June 14 solely on the issue of whether the Ontario court has jurisdiction to determine the parenting issues pursuant to either section 22(1)(b) or 23 of the Children’s Law Reform Act, R.S.O. 1990, c.C.12, as am, and if not, for the return of the child to Dubai. The issues are complicated by foreign law and disputed factual contentions between the parties. There appears to be some merit to the respondent’s assertion that the applicant is over litigating and running up her costs. He delivered ten affidavits in support of the alleged assault by the respondent on his adult daughter. He proposed a pleading amendment which resulted in an order adjourning the trial from April to June to enable the respondent to respond. He proposes as alternative relief an order returning the child to Germany, even though neither party has lived there since January 2019. He undertook and deposed to an extensive investigation of her parent’s financial affairs, especially her father’s bankruptcy, ostensibly by way of response to her assertion that the help they had provided her was impacting their retirement. Conduct that increases the other party’s legal expenses was relied on in Baker v. Rego, 2013 ONSC 3309 to order security for costs.

20Other factors in Baker were failure to pay child support and an outstanding costs order. There is no order here requiring the applicant to pay child support, but there can be little doubt that he is not supporting the child at the level required by Ontario law having regard to the income he would have had to afford the lavish lifestyle that the respondent describes the family as enjoying. Lack of appropriate voluntary child support is a factor considered in reaching the conclusion that it is just to require security for costs in this case.

21The UAE is not signatory to the Convention on the Civil Aspects of International Child Abduction, 25 October 1980, Can. T.S. 1983 No. 35 (entered into force 1 December 1983) (the "Hague Convention"). Security for costs is not available under the Hague Convention: Article 22. The Convention is an international treaty between contracting states each of which contracts to many obligations including to take all appropriate measures to secure the implementation of the objects of the Convention, to use the most expeditious procedures available and where circumstances require to provide or facilitate the provision of legal aid and advice. Article 22 is not persuasive of what the outcome should be in the context of private litigation governed by the Ontario FLRs.

22Consideration of what is just includes both procedural and substantive law: Wreggbo v. Vinton, at para 5. The primary objective of the FLRs r 2 (2)(3) speaks to dealing with cases justly:

(2) The primary objective of these rules is to enable the court to deal with cases justly. O. Reg. 114/99, r. 2 (2).

(3) Dealing with a case justly includes,

(a) ensuring that the procedure is fair to all parties;

(b) saving expense and time;

(c) dealing with the case in ways that are appropriate to its importance and complexity; and

(d) giving appropriate court resources to the case while taking account of the need to give resources to other cases. O. Reg. 114/99, r. 2 (3).

23In the circumstance of this case the primary objective is better met by ordering security for costs. Both parties will be able to fully participate in the very important upcoming trial. The order reflects the complexity of the issues and the costs associated with their balanced presentation at trial. If the respondent is the successful party the order will also serve to save time and expense in relation to collecting any costs awarded to her, which will in turn facilitate the adjudication of the merits of what parenting arrangements will be in the child’s best interests. If the applicant is the successful party, the amount of security will be available for return to him.

The order

24The respondent asks for $200,000 as security for costs. She bases this on her fees to date, plus $80,000 representing the estimate for the upcoming trial. The estimate is reasonable given there is an outstanding expert report, questioning of experts before trial is scheduled, plus preparation for and conduct of the trial. That amount represents full costs whereas in general costs are awarded on a partial indemnity basis. Accordingly, the applicant is ordered to pay $150,000 as security for costs prior to the commencement of the trial on June 14, 2021. The funds shall be held by his counsel in trust, in an interest bearing account, not to be released without a further order of the court or written direction from both parties.

25In the event that counsel cannot agree on the disposition of the costs of this motion I will determine the issue by written submissions. Counsel shall advise me by June 1 whether they have reached an agreement, and if not their proposed schedule for making their submissions.

If written submissions are required, they shall not exceed three pages in length plus attached Bills of Costs, and any offers relevant to this motion. They are to be sent by email to scj.assistants@ontario.ca.

Mackinnon J.