COURT FILE NO.: CV-18-77629
DATE: 2021/08/09
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Theresa Brewer, Plaintiff (Responding Party)
AND
Canada Corporation No. 343827-9 a.k.a. Canada Lands Company CLC Limited and Ontario Corporation No. 230475659 a.k.a. 360 Restaurant, Defendants (Moving Parties)
BEFORE: Justice R. Ryan Bell
COUNSEL: Alice M. Mihailescu, for the Plaintiff Alexandra Logvin, for the Defendant
HEARD: August 3, 2021
ENDORSEMENT
Overview
[1] In this personal injury claim, the defendants move for security for costs from the plaintiff, Ms. Brewer, on the basis that Ms. Brewer is ordinarily resident outside Ontario. Ms. Brewer alleges she was injured while dining at the defendants’ premises in November 2017. She claims $1.8 million in damages, not including damages for future care.
[2] In response to the defendants’ motion, Ms. Brewer asserts that she is impecunious. She contends that her impecuniosity is directly linked to the trip and fall accident at the defendants’ premises and that an order for security for costs would not be just in the circumstances because it would block her access to the courts.
[3] For the following reasons, I have concluded that it is just in the circumstances that Ms. Brewer be required to post security in the amount of $17,000, up to and including documentary and oral discovery, within 60 days. Ms. Brewer shall not take any further steps in the action until the amount is posted and proof is provided to defendants’ counsel.
The Facts
[4] Ms. Brewer lives in Pembroke Pines, Florida. In November 2017, Ms. Brewer attended at the 360 Restaurant in the CN Tower in Toronto, for a company function. She alleges that when she turned around to speak to another guest, her foot hit “the uneven and rotating floor”; as a result, she fell, hit her head, and was knocked unconscious.
[5] The defendants strongly contest liability.
[6] Ms. Brewer commenced her action in August 2018. In September 2018, the defendants put Ms. Brewer on notice that they considered her claim unmeritorious and they intended to seek an order for security for costs on the basis that she is an out-of-province resident. The defendants served their defence in January 2019.
[7] In February 2019, the defendants reiterated their concern about recovering their costs of the litigation given Ms. Brewer’s out-of-province residence. The defendants requested that Ms. Brewer post $35,000 as security toward the costs of the action. There was no response to the defendants’ request for more than a year.
[8] In October 2019, in response to Ms. Brewer’s request, the defendants advised they were not in a position to schedule discoveries because they had received no response to their February 2019 request.
[9] In April 2020, Ms. Brewer, through counsel, advised the defendants that she was impecunious. Exchanges between counsel followed, with the defendants requesting records in support of the impecuniosity claim and Ms. Brewer seeking dates to conduct examinations for discovery. A stalemate ensued: the requested records were not produced by Ms. Brewer and the defendants maintained their position that it was premature to schedule examinations for discovery with the security for costs issue still pending.
[10] Then, in March 2021, Ms. Brewer served the defendants with a notice of examination requiring their attendance on August 11, 2021. The defendants brought their motion for security for costs.
[11] Ms. Brewer has now, in her responding motion record served at the end of July 2021, produced financial records relevant to her claim that she is impecunious.
[12] At the hearing of the motion, counsel for Ms. Brewer confirmed that the August 11, 2021 discovery date would be vacated.
The Law and Analysis
[13] Rule 56.01(1)(a) provides that the court, on motion by the defendant, may make such order for security for costs as is just where it appears that the plaintiff is ordinarily resident outside Ontario.
[14] Rule 56.01(1) does not create a prima facie right to security for costs; rather, the rule triggers an inquiry in which the court, using its broad discretion, considers multiple factors to make such order as is just in the circumstances including, the merits of the claim, the financial circumstances of the plaintiff, and the possibility of an order for security for costs preventing a bona fide claim from proceeding: Stojanovic v. Bulut, 2011 ONSC 874, at paras. 4-5; Lipson v. Lipson, 2020 ONSC 1324, at para. 26.
[15] The Court of Appeal for Ontario’s observations in Yaiguaje v. Chevron Corp., 2017 ONCA 827, at paras. 23-25, make plain that the focus of the analysis under Rule 56 is the justness of the order:
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 rr. 56 or 61 have been met.
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…
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 of the circumstances of the case and guided by the overriding interest of justice to determine whether it is just that the order be made.
[16] The initial onus is on the defendant to show that the plaintiff falls within one of the four enumerated categories in Rule 56.01. If the defendant meets the initial onus, the plaintiff can rebut the onus and avoid security for costs by showing that they have sufficient assets in Ontario or a reciprocating jurisdiction to satisfy a costs order, the order is unjust or unnecessary, or the plaintiff should be permitted to continue with action despite their impecuniosity: Lipson, at para. 28.
[17] Because Ms. Brewer is ordinarily resident in the U.S., the defendants have met their initial onus that she falls under Rule 56.01(1)(a). The issue then is whether it is just to order security for costs.
[18] Ms. Brewer asserts that she is impecunious and unable to raise sufficient funds for the litigation, her claim is not plainly devoid of merit, and, balancing the parties’ interests, an order for security for costs would be unjust in the circumstances.
[19] In response, the defendants submit that Ms. Brewer has not established she is impecunious, she has not made full and frank disclosure of her financial circumstances, and there is no medical evidence in support of her present condition that she contends precludes her from being able to work. The defendants also emphasize that they raised the issue of security for costs at an early stage of the litigation.
(i) Impecuniosity
[20] I am unable to find, on the evidence before me, that Ms. Brewer is impecunious. As was the case in Lipson, at para. 32, Ms. Brewer has, at best, demonstrated that she is experiencing financial hardship. She is currently unemployed. However, her statements of income, assets and debts for the years 2017 to 2020 disclose that, in each year, her assets exceeded her debts. This continues to be the case in 2021: Ms. Brewer’s assets exceed her debts by approximately $106,000.
[21] Ms. Brewer’s primary asset – her condominium residence – is unencumbered. Ms. Brewer emphasizes that her residence is not a liquid asset. She asserts that because of her lack of income, she would be “entirely unable to make monthly payments on any additional potential loans using her property as collateral.” I am unable to accept Ms. Brewer’s position for two reasons. First, there is no evidence that Ms. Brewer has sought a loan from a financial institution and been refused, or that she has even made inquiries in this regard. Ms. Brewer states in her affidavit that her lawyers have indicated to defendants’ counsel, on multiple occasions that “I am impecunious.” With respect, counsel’s assertion does not make it so. As Perell J. stated in Montrose Hammond & Co. v. CIBC World Markets Inc., 2012 ONSC 4869, at para. 34:
A litigant who relies on impecuniosity bears the onus of proof on this point and must do more than adduce some evidence of impecuniosity and must satisfy the court that it is genuinely impecunious with full and frank disclosure of its financial circumstances.
[22] A security for costs motion requires a “rigorous standard” of financial disclosure: Lipson, at para. 33. In Al Masri v. Baberakubona, 2010 ONSC 562, at para. 19, citing Morton v. Canada, 2005 CanLII 6052 (ON SC), at para. 32, the court described the plaintiff’s financial disclosure as requiring “robust particularity”, including the amount and source of all income, a description of all assets, including values, a list of all liabilities and other significant expenses, an indication of the extent of the ability of the plaintiff to borrow funds, and details of any assets disposed of or encumbered since the cause of action arose.
[23] Ms. Brewer’s financial disclosure does not, in my view, meet the “robust particularity” standard. As I have described, there is no evidence as to the extent of her ability to borrow funds. The terms of her loan agreement with her mother have not been disclosed. The source of the funds used to pay off her mortgage in 2018 or 2019 has not been disclosed.
[24] In addition, I am troubled by the inconsistency between Ms. Brewer’s sworn statement that, since the accident, she has only been able to work for a two-week period in October 2020 (as a school nurse), and her 2019 statement of income, assets and debts, which discloses temporary employment income of approximately $9,700 (at a hospice).
[25] The second reason why I am unable to accept Ms. Brewer’s position that she would be unable to make monthly payments on any additional potential loans reflects the larger insufficiency of her disclosure in responding to this motion. Ms. Brewer’s position is based on her lack of employment income and her inability, she alleges, to work due to injuries she suffered as a result of the accident. The complete absence of any medical evidence regarding Ms. Brewer’s present or future ability to work is significant given her reliance on her inability to make monthly payments on a potential loan to demonstrate her impecuniosity. With the exception of the medical record documenting her overnight stay in hospital a week after the incident and the tests performed, Ms. Brewer has provided no medical documentation related to her alleged injuries.
(ii) The Merits of the Claim
[26] For purposes of this motion, the defendants do not take the position that Ms. Brewer’s claim is “plainly devoid of merit.” They assert that in considering whether the court should exercise its discretion in favour of ordering security for costs, the merits of the claim are, at best, a neutral factor.
[27] I agree. The merits of the case are a relevant consideration as is the possible result of an order for security for costs preventing a bona fide claim from continuing. If a plaintiff demonstrates impecuniosity, they can resist the motion for security for costs by showing that the claim is not plainly devoid of merit; if impecuniosity is not established, closer scrutiny is warranted and the relevant question becomes whether a plaintiff has shown a good chance of success: Michailidis v. Vertes, 2019 ONSC 6440, at para. 6; Zeitoun v. Economical Insurance Group, 2008 CanLII 20996 (ON SCDC), 91 O.R. (3d) 131, at paras. 49-50.
[28] In considering the merits of the claim on a security for costs motion, the court’s analysis is based primarily on the pleadings, with recourse to the evidence filed on the motion, and in appropriate cases, to selective references to excerpts from the examinations for discovery when available: Padnos v. Luminart Inc., 1996 CanLII 11781 (ON SC), at para. 7. In this case, the evidence filed on the motion relevant to the merits is scant and examinations for discovery have not been conducted. Ms. Brewer urges me to find that her claim has a “good chance of success.” I decline to make this finding on the present record. Even if I were prepared to do so, such a finding would not suffice to avoid posting security for costs.
(iii) Justness of a Security for Costs Order
[29] On a motion for security for costs, the court must take a holistic approach: it retains a broad discretion to make the order that is just in all the circumstances. Ms. Brewer asserts that her impecuniosity is directly linked to the accident at the defendants’ premises and the defendants’ alleged negligence. She contends that the defendants are now attempting to use her financial circumstances, caused by the defendants’ conduct, to impede her from continuing with her case. Ms. Brewer relies on the following passage from John Wink Ltd. v. Sico Inc., 1987 CanLII 4299 (ON SC):
There can be no question that an injustice would result if a meritorious claim were prevented from reaching trial because of the poverty of the plaintiff. If the consequence of an order for costs would be to destroy such a claim no order should be made. Injustice would be even more manifest if the impoverishment of the plaintiff were caused by the very acts of which the plaintiff complains in the action.
[30] I have already discussed the insufficiency of Ms. Brewer’s disclosure on this motion and the absence of any medical evidence regarding her ability to work.
[31] The record does not support Ms. Brewer’s contention that the timing of the defendants’ motion is a litigation tactic designed to impede her from continuing her case. The defendants gave notice at the outset of the litigation of their intention to seek security for costs. Their requests for documents supporting Ms. Brewer’s contention that she was impecunious went unanswered. A motion for security for costs may be made by a defendant after delivery of a defence: Rule 56.03(1). Motions for security for costs are often brought before examinations for discovery commence, in view of the potentially significant expenses that may be incurred as discovery proceeds: Valu Healthcare Realty Inc. v. Zellers Inc., 2004 CanLII 45469 (ON SC), at para. 24. In this case, it is not surprising that the service of the notice of examination and the unilateral scheduling of the date for the examination prompted the defendants to proceed with their motion.
[32] Ultimately, justness requires a balancing between ensuring that meritorious claims are allowed to proceed with the prospect of an unenforceable costs judgment in the event a plaintiff is unsuccessful at trial: Lipson, at para. 47, citing Ascent Inc. v. Gox 40 International Inc., [2007] O.J. No. 1800, at para. 3.
[33] I have applied a holistic approach, considered all of the relevant factors, and balanced Ms. Brewer’s interest to not have her access to the courts blocked with the defendants’ protection against an unenforceable costs award. I conclude that it is just in the circumstances that Ms. Brewer be required to post security for costs in an amount that includes costs incurred by the defendants to date (but not including the costs of this motion) and costs projected to be incurred up to and including documentary discovery and examinations for discovery. Based on these incurred and projected costs, I fix the amount of security to be posted in the amount of $17,000. As Rule 56.07 expressly provides, the defendants shall be entitled to return to court to seek further security in respect of future steps in the proceeding.
Disposition and Costs of the Motion
[34] I order that Ms. Brewer post security in the amount of $17,000 for costs incurred and to be incurred up to and including oral and documentary discovery, within 60 days of the release of this endorsement. Ms. Brewer shall not take any further steps in the action until this amount is posted and proof is provided to defendants’ counsel.
[35] Costs of the motion were addressed briefly by counsel at the conclusion of the hearing and by way of written submissions. The defendants seek their costs of the motion in the amount of $5,000, a substantial reduction in their actual costs incurred on a partial indemnity basis.
[36] I do not agree with Ms. Brewer’s submission that an order requiring the posting of security in an amount less than $75,000 (the defendants’ position as to the appropriate amount of security to cover the entire trial) represents divided success on the motion. Ms. Brewer opposed the posting of any amount of security. The defendants raised the issue of security at the outset of the litigation. Ms. Brewer provided no financial records in support of her claim to be impecunious until the week before the motion. Ms. Brewer seeks to explain away the delay in disclosure by linking it to her “physical and psychological condition.” However, there is nothing in the record beyond Ms. Brewer’s assertion in this regard. The defendants are the successful parties on the motion and they are entitled to their costs.
[37] As to the quantum of costs, this was not a complex motion. In my view, the amount claimed by the defendants is excessive. Ms. Brewer’s own costs of the motion on a partial indemnity scale are approximately $2,500. I find that $3,000 is a fair and proportionate amount and an amount that reflects what Ms. Brewer, as the unsuccessful party, could reasonably expect to pay. I fix the defendants’ costs of the motion at $3,000. These costs are to be paid by Ms. Brewer to the defendants within 60 days.
Justice R. Ryan Bell
Date: August 9, 2021
COURT FILE NO.: CV-18-77629
DATE: 2021/08/09
ONTARIO
SUPERIOR COURT OF JUSTICE
RE: Theresa Brewer, Plaintiff (Responding Party)
AND
Canada Corporation No. 343827-9 a.k.a. Canada Lands Company CLC Limited and Ontario Corporation No. 230475659 a.k.a. 360 Restaurant, Defendants (Moving Parties)
BEFORE: Justice R. Ryan Bell
COUNSEL: Alice M. Mihailescu, for the Plaintiff Alexandra Logvin, for the Defendant
ENDORSEMENT
Justice R. Ryan Bell
Released: August 9, 2021