Court File and Parties

COURT FILE NO.: CV-19-628651

MOTION HEARD: January 18, 2021

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Hoe Plaintiff

AND:

Ren, Tian, & Yan Defendants

BEFORE: Master Josefo

COUNSEL: H. Cohen, counsel for plaintiff (responding party), email: cohen@hcohen.law

P. Starkman, counsel for defendants (moving parties), email: paul@starkmanbarristers.com

REASONS FOR DECISION and Order

January 20, 2021

What this Motion is about:

[1] Further to my prior endorsements, including those of December 11 and November 17, 2020, counsel on January 18, 2021 completed submissions on defendants’ Security for Costs motion. Submissions began last November 17^th. For reasons explained in my November 17^th endorsement, counsel agreed that the initial focus would be pursuant to Rule 56.01(a): whether plaintiff is “ordinarily resident outside Ontario”. If he is found not ordinarily resident outside Ontario, the parties could return to argue, pursuant to Rule 56.01(e), whether the action is “frivolous and vexatious”.

Relevant Background Facts & Issues:

[2] Essentially, the plaintiff and the three defendants at the relevant time were all graduate level students at the University of Toronto (“U of T”). Plaintiff sues defendants for false statements that they allegedly made in or about the Fall of 2018 when accusing plaintiff of sexual and other forms of harassment. Defendants deny the claim. They also assert that the plaintiff should have pursued his remedies through other, internal U of T processes, or as against other parties.

[3] This motion is no longer complicated by the issue of the plaintiff’s impecuniosity. Mr. Cohen appropriately acknowledged during his submissions that plaintiff has regularly received financial support from his family back home in Malaysia. Thus, as Mr. Cohen conceded, plaintiff is not asserting impecuniosity because there is no evidence of “robust particularity” of impecuniosity, as is required. See, as one example in that regard, the 2013 decision of T.S. Publishing Group Inc. v. Shokar, 2013 ONSC 1755 by Master Glustein (now Justice Glustein). In that decision, Justice Glustein refers to earlier cases which have long made clear the robust proof needed to establish impecuniosity.

[4] The facts in this matter involve the plaintiff, a Malaysian citizen, first coming to Canada in or about 2011 when he began his studies at the U of T. Paragraph two of the Statement of Claim issued in early October 2019 asserts:

The Plaintiff is a PhD level student in chemical engineering at the U of T, and resides in the City of Toronto, Ontario while at school [emphasis added].

[5] Initially living at the U of T graduate student residence, in or about 2012 the plaintiff rented a room at a location in Toronto (“D’arcy street”), which flat he has ostensibly used while in Toronto. Plaintiff holds a Permanent Resident (“PR”) card, which was recently renewed.

[6] Pursuant to his cross-examination testimony taken on January 7, 2021 (Q. 167), in November 2018 the plaintiff obtained his masters degree in engineering from the U of T. In the last several years, his time spent in Ontario has been limited and sporadic:

• January to May, 2019: Ontario;
• May to October, 2019: Malaysia;
• October 2019 to January 2020: Ontario;
• January 2020 to September 27, 2020: Malaysia;
• September 28, 2020 to present: Ontario.

[7] His return to Ontario in October 2019 coincided with the issuance of this within claim, which was served, pursuant to a December 23, 2019 Order for substitute service, on December 24, 2019. Plaintiff next returned to Ontario on September 27, 2020 while this within motion was pending. As he testified (Q. 70 and following), for this most recent trip to Ontario he initially purchased a return ticket to Malaysia, with a return date of December 22, 2020 (Q. 75-76). While the plaintiff asserted without corroborating evidence (Q. 80) that this was “meant to be a one-way ticket”, and the return portion was eventually cancelled, the uncontroverted documentary evidence before me is that the plaintiff, at least when he purchased the ticket, then intended to soon return to Malaysia.

[8] I am unable to accept the submission of Mr. Cohen, that the plaintiff could not have left Malaysia earlier in than September 2020 due to the Covid pandemic. Exhibit two to the cross-examination of the plaintiff confirms that, as of June 24, 2020, Malaysian students studying overseas or those Malaysians with permanent resident status in another country were at liberty to return to their studies or to that country. Yet the plaintiff, in my view for understandable reasons, chose to remain in Malaysia, where most all of his family lives. That includes his parents and a sibling. Another family member lives in Singapore.

[9] It is not in dispute that the plaintiff has no relatives in Ontario. He is unmarried, lives alone, and has no children. Further, he owns no property, nor does he have a successful ongoing business, in Ontario. His company, Elergreen Industry Corporation, was in November 2018 incorporated in Canada. Yet there is also an ElerGreen corporate entity in Malaysia. The Canadian company in 2020 earned $400., from one small project. Otherwise, funds have been transferred to the plaintiff from his family, using the corporate Elergreen vehicle, and duly reported on plaintiff’s 2019 T4 as the plaintiff’s employment income. ElerGreen has not, however, apparently operated since March 2020. While Mr. Cohen asserts that is due to the pandemic, I have no reliable evidence that Elergreen, and a post-graduate engineer as is the plaintiff, could not have been operating a business or earning income notwithstanding the challenges which the pandemic poses.

[10] The registered address of Elergreen is 44 Gerrard Street East, in Toronto. This address is that of Ryerson University’s Zone Learning Program, in which the plaintiff was registered. This Zone program is commonly described as a business “incubator”, which is open to most anyone to register, so to help mentor, foster, and assist start-ups and other embryonic business entities and their proprietors. That this address is used for Elergreen does not imply stability or assets, especially as the evidence shows that the plaintiff’s connection to the Zone Learning Program is scheduled to end later this year.

[11] The plaintiff’s bank records show that from April through October 2020 he received the federal government emergency CERB benefits, including for those many months when he was not living in Ontario, but rather was in Malaysia. As the issue before me is one of balancing discretion, I am entitled to take into account the plaintiff’s conduct in that regard, considering the defendant’s concern is whether there will be sufficient assets available or exigible to pay its costs in this matter if it is the successful litigant.

[12] Overall, despite for many years renting a room and attending school in Ontario, I find that the plaintiff, a citizen of Malaysia, has lived in Ontario far more sporadically since he finished his formal studies. That dovetails with what his counsel pleaded at paragraph 2 of the above-quoted statement of claim: the plaintiff resides here “while at school”. As he is no longer “at school”, his ties to this jurisdiction, I find, are in reality now quite tenuous.

[13] Ultimately, the totality of the evidence supports my finding of these following facts. The plaintiff:

• has no family in Ontario, with all his family in Malaysia or Singapore,
• owns no property or assets in Ontario,
• receives financial support from his family abroad,
• only was in Ontario 95 days in 2020, from September 27, 2020 to the end of last year, and ongoing,
• in my view, was likely here primarily for purposes of this within motion,
• had initially planned to return to Malaysia after a short stay last Fall of 2020,
• is likely obliged to eventually return to Malaysia so to meet his obligations under their “STAR” and other government scholarship terms and conditions,
• has no current employment, nor income being earned (rather than family monies disbursed to him) in Ontario.

Applying the Law to the Facts: My Conclusions

[14] It is the burden of the defendant to satisfy its onus that the plaintiff is ordinarily resident outside of Ontario. This must be done based on proven facts, “not mere conjecture, hunch or speculation”, as was held in MacKinnon v. A.J. Bus Lines, 2010 ONSC 2802.

[15] As Master MacLeod (as he then was, now RSJ MacLeod) held in Austin v. Torstar Corp., 2001 CarswellOnt 2814:

In a case where the evidence is ambiguous, for the purpose of this rule, one of the critical factors may well be whether or not the plaintiff retains assets in the jurisdiction which would be exigible to satisfy a judgment for costs.

[16] In the Court of Appeal decision, Yaiquaje et al v. Chevron, 2017 ONCA 827, the Court vacated an Order for Security for Costs. The Court, when addressing how the Rule should be applied, held in part as follows:

[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 Rules 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 4354 (ON SC), 70 O.R. (2d) 119, [1989] O.J. No. 1399 (H.C.J.); Morton v. Canada (Attorney General) (2005), 2005 6052 (ON SC), 75 O.R. (3d) 63, [2005) O.J. No. 948 (S.C.J.); Cigar500.com Inc. v. Ashton Distributors Inc. (2009), 2009 46451 (ON SC), 99 O.R. (3d) 55, [2009] O.J. No. 3680 (S.C.J.); Wang v. Li, [2011] O.J. No. 3383, 2011 ONSC 4477 (S.C.J.); and Brown v. Hudson's Bay Co., [2014] O.J. No. 795, 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 for in the Rules. The correct approach is for the court to consider the justness of the order holistically, examining all the circumstances of the case and guided by the overriding interests of justice to determine whether it is just that the order be made.

[17] I am alive to these holdings, and to the issues noted and guidance emerging from these and other decisions. That guidance includes that this Rule not be “weaponized” as part of the litigator’s battle arsenal. Yet, the opposite of not allowing the Rule to stop possibly meritorious claims is that defendants be not, in essence, left “holding the (costs) bag” if an unsuccessful plaintiff has no ability to satisfy an adverse costs award, and can easily leave the jurisdiction given a lack of ties to Ontario.

[18] In my view, the conclusions of Master Haberman in Elliott et al. v. Turbitt et al., 2011 ONSC 3637 are particularly apt to this matter before me. Master Haberman in Elliott noted “no evidence of anything actually tethering [the plaintiff] to this jurisdiction”, and that the plaintiff “…seems to move from place to place without explanation and has nothing tying him here”…and is only living in Ontario “as it is expedient for him to do so now.” She quoted the then Senior Master in Guzzi v. Guzzi [1952] O.W.N. 495, who stated, “there must be something more convincing than a mere statement that the plaintiff intends to remain in Ontario. There is no indication that he is permanently employed…there is nothing to hold him in Ontario.”

[19] In my view, these above findings in Elliott and in Guzzi apply equally to this plaintiff. In this within matter, there is also nothing to hold the plaintiff to Ontario. He has no ties here, no serious work, no family, and is here only sporadically and temporarily, all as reiterated above in my factual findings. Importantly, plaintiff also has no exigible assets which could satisfy an adverse costs award. For all these reasons, therefore, I am satisfied on the evidence that plaintiff is ordinarily resident outside of Ontario.

[20] Security for Costs in these circumstances is just, reasonable, and it is the intent of the Rule that these defendants be afforded the protection set out in the Rule. I thus turn to quantum. To that purpose I have reviewed the Bill of Costs found at Exhibit V to the original Motion Record of defendants. Mr. Starkman agreed that, if I found the plaintiff not ordinarily resident in Ontario, it was appropriate for me to set the quantum.

Quantum: How Much Security?

[21] Mr. Starkman sought a “grand total”, as he described it, of $73,054.50, all the way through trial. In some of the estimated time he and his associate Mr. Zhang each contributed a similar number of hours. For example, for mediation 10 hours was allocated to each time-keeper, for a total of 20 hours for mediation. For examinations for discovery, Mr. Starkman allocated 30 hours for his work, with 20 hours for Mr. Zhang.

[22] While the amount of the claim runs in the millions of dollars, so this is seemingly “high-stakes litigation”, I find the costs estimated by defendants to be somewhat on the generous side, if I may diplomatically so opine. I thus carefully review the quantum sought.

[23] In my view, it is presently premature to seek trial costs. This case is a very long way from trial. If the case does not subsequently settle or otherwise resolve, the defendants are at liberty to seek additional security at the appropriate time. Yet, the $34,578 allocated for trial is presently deducted. So too is the pre-trial amount of $5,401. Given present Covid-related delays, it will be many months before the parties are ready for and attending at a pre-trial. As the parties have undergone an extensive process with regard to this motion, including cross-examination of the plaintiff, such may also streamline his upcoming examination for discovery.

[24] Heeding the finding of the Court of Appeal in Yaiquaje et al v. Chevron, and specifically, the need for “justness of the order holistically, examining all the circumstances of the case and guided by the overriding interests of justice to determine whether it is just that the order be made”, in applying my discretion I holistically order that Security for Costs in the quantum of $20,000 be presently paid. It can be paid to the Accountant of the Court or, and perhaps more feasible given the interruption of some services due to the Covid pandemic, paid in trust to the trust account of counsel for the defendants.

Costs of this Motion:

[25] Defendants were successful in obtaining Security, yet not in the quantum sought. Thus, while “costs follow the event”, counsel for defendants should consider a moderate approach when he approaches counsel for plaintiff to address costs for this motion. It is rarely beneficial, after all, to argue further over costs if such can be avoided.

[26] If counsel cannot agree on the costs payable by plaintiff to defendants for this motion, a short teleconference with me can be arranged through ATC Magnante. In advance, counsel will exchange Costs Outlines, and deliver same to Mr. Magnante. Additionally, they can submit no more than three pages each in written submissions on costs.

Master J. Josefo

Decision released: January 20, 2021