Court File and Parties
COURT FILE NO.: CV-19-79346 DATE: 2021-11-16 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: 10313033 CANADA INC., Plaintiff AND: ANTRANIK KECHICHIAN, SANDY KECHICHIAN, ANDREW CHEUNG, CINDY LIN, MELKON KECHICHIAN and 7349602 CANADA INC., Defendants
BEFORE: Associate Justice Kaufman
COUNSEL: Robert P. Hine, Counsel for the Plaintiff Antranik Kechichian, representing himself
HEARD: November 16, 2021
RULING ON MOTION
[1] The plaintiff, 10313033 Canada Inc. (“103 Canada”) moves under Rules 57.03(2) and 60.12 of the Rules of Civil Procedure[^1] for an order striking out Antranik Kechichian’s amended statement of defence on the ground that he has not paid the costs ordered by Justices McLean and Corthorn.
[2] This action is one of nine cases I am case managing. The case managed actions relate to Mr. Kechichian’s sale of the Laurier Optical franchise system to the Savard Group in 2016. The assets acquired by the Savard Group became the subject of a vesting order, made in the course of the CCAA proceedings in Quebec in 2017, which vested those assets and assigned various contracts to the plaintiff.
[3] In responding to this motion, Mr. Kechichian purported to bring a cross-motion to strike the plaintiff’s statement of claim on the ground that it is “baseless, vexatious and an abuse of procedure”. I declined to hear this cross-motion because Mr. Kechichian never indicated that he intended to bring this motion at any of the numerous case management conferences held in these proceedings. Pursuant to my case management order of January 27, 2021, motions could not be filed without first discussing them at a case conference. Moreover, a defendant’s motion to strike a pleading on these grounds must be made to a judge as opposed to the Court, and it is not within my jurisdiction to grant this relief: Rule 21.01(3)(d).
Issue
[4] The only issue in this motion is whether Mr. Kechichian’s amended statement of defence should be struck for failure to pay the outstanding costs orders.
This action
[5] In this action, 103 Canada alleges that certain terms of the 2016 sale also included non-competition, non-solicitation, and confidentiality agreements in favour of the Savard Group. The claims advanced in this action are based, in part, on the defendants’ alleged breaches of these agreements. Specifically, 103 Canada alleges that the defendants operate a competing retail store selling optical products, have solicited 170,000 customers of the Laurier Optical franchise system, have wrongfully used Laurier Optical’s trademarks, and have refused to pay royalties or advertising fees in connection with a Laurier Optical franchise they briefly operated at the T&T Hunt Club location.
[6] Mr. Kechichian has defended this action and advanced a “third party counterclaim” by which he sought over 21M in damages against the plaintiff, two of its directors, and others. As further discussed below, Justice Corthorn struck Mr. Kechichian’s “third party counterclaim” and ordered him to pay the plaintiff’s costs on April 2, 2020.
The Applicable Rules
[7] The plaintiff’s motion is grounded in Rules 57.03(2) and 60.12, which read as follows:
57.03(1) On the hearing of a contested motion, unless the court is satisfied that a different order would be more just, the court shall,
(a) fix the costs of the motion and order them to be paid within 30 days; or
(b) in an exceptional case, refer the costs of the motion for assessment under Rule 58 and order them to be paid within 30 days after assessment.
(2) Where a party fails to pay the costs of a motion as required under subrule (1), the court may dismiss or stay the party’s proceeding, strike out the party’s defence or make such other order as is just.
60.12 Where a party fails to comply with an interlocutory order, the court may, in addition to any other sanction provided by these rules,
(a) stay the party’s proceeding;
(b) dismiss the party’s proceeding or strike out the party’s defence; or
(c) make such other order as is just.
The Unpaid Costs Orders
[8] The plaintiff relies on two unpaid costs orders. The first relates to 103 Canada, Mansour and Bonhomme’s motion to strike Mr. Kechichian’s “third party counterclaim” on the ground that it amounted to a collateral attack on the vesting orders, and that it did not disclose a reasonable cause of action against Bonhomme and Mansour. Bonhomme and Mansour are directors of 103 Canada.
[9] In reasons released on April 2, 2020 and June 6, 2020, the Honourable Justice Corthorn granted the plaintiff, Bonhomme and Mansour’s motion, and struck Mr. Kechichian’s third party Counterclaim in its entirety as against them. On July 23, 2020, she released her Costs Endorsement in which she ordered Mr. Kechichian to pay the plaintiff’s costs on a substantial indemnity basis, which she fixed in the amount of $31,355.
[10] The plaintiff also relies on the Order the Honourable Justice McLean dated October 17, 2019. Justice McLean heard the plaintiff, Bonhomme and Mansour’s motion to strike six separate actions Mr. Kechichian commenced against them. He permanently stayed five of these actions and struck a sixth one without leave to amend. Justice McLean ordered Mr. Kechichian to pay the plaintiff’s costs, which he fixed in the amount of $28,000.
[11] It is not disputed that these costs orders have not been paid, and that Justices Corthorn and McLean’s Orders have not been appealed.
Analysis
[12] Rules 57.03(2) and 60.12 are predicated on the fact that, in some circumstances, a party’s position ought to be foreclosed for failure to comply with court orders. If the merits of a case always had to be determined before such remedies could be imposed there would be little room for the effective application of the rules.[^2]
[13] While the plaintiff relies on Justices McLean and Corthorn’s costs orders, only Justice Corthorn’s unpaid costs order was rendered in this proceeding and can be relied upon to strike Mr. Kechichian’s defence.
[14] In Ortepi v. Pozzuoli[^3], Master Graham (as he was then titled) held that Rules 57.03(2) and 60.12 contemplate sanctions where a party fails to pay costs or comply with interlocutory orders rendered in the same proceeding. I agree with him that by conferring the power to dismiss, strike or stay a party’s proceeding, in the singular, the Rules’ drafters intended for these sanctions to only be available in the proceeding in which the interlocutory order, or the costs award, was made. By contrast, Rule 56.01(1)(c), which confers the power to make an order for security for costs, allows a defendant or respondent to move for such an order where the plaintiff has not paid costs in the same or another proceeding.
[15] Accordingly, Rules 57.03(2) and 60.12 do not authorize the striking of a pleading where a costs order remains unpaid in a different proceeding.
[16] In determining whether a pleading should be struck under Rules 57.03(2) or 60.12, the Court should balance the parties’ competing interests and consider all relevant factors. Impecuniosity and the apparent merits of the party’s pleading have been held to be the main relevant factors. [^4]
a. Impecuniosity
[17] Mr. Kechichian alleges that he is impecunious and would gladly pay the costs order in full if he were able. He has offered to pay the plaintiff’s costs by way of a monthly payment of $200 per month plus 3% interest. At that rate, it would take Mr. Kechichian 25 years to pay the principal portion of the two costs awards. Mr. Kechichian is 70 years old.
[18] Mr. Kechichian has not met his burden of proving that he is impecunious. He has not filed any financial documents or details to support his position. As this Court has previously held, a party cannot merely claim poverty without also showing that there are no assets from which a costs order could be paid. [^5] In the context of motions for security for costs, this Court has held that the evidentiary threshold for impecuniosity is high, and bald statements unsupported by detail are not sufficient. Financial evidence must be set out with robust particularity, and no material questions should remain unanswered.[^6]
[19] Here, there are many questions left unanswered. Mr. Kechichian acknowledges that he owns five commercial condominiums, but he provides no evidence about their value, the equity available to him, whether they generate rents, or his ability to mortgage them. The same questions arise with respect to the residential property he owns with his wife in Cumberland, Ontario and the cottage property located in Mont-Tremblant, Québec.
[20] Moreover, Mr. Kechichian acknowledges having received 6M$ from the Savard Group as part of Laurier Optical’s sale proceeds. These funds are unaccounted for.
[21] Finally, the plaintiffs have referred me to the judgment of the Honourable Justice Gouin of the Quebec Superior Court, dated May 26, 2021, and reported at 2021 QCCS 2103. While Mr. Kechichian was representing himself in these proceedings, Optical Vision Canada Ltd., a corporation under his control, was represented by counsel. It is reasonable to assume that Mr. Kechichian had funds available to retain counsel in these proceedings.
b. Mr. Kechichian’s defences may have some merit
[22] With respect to the merits of Mr. Kechichian’s defence, the plaintiff argues that Mr. Kechichian has failed to address this factor in his affidavit. While I generally agree, the Court is also entitled to consider the pleading to assess a defence’s potential merits.
[23] Mr. Kechichian disputes the plaintiff’s assertions that it stands in the shoes of the Savard Group with respect to the non-competition agreements, argues that Laurier Optical’s patient files were not sold to the Savard Group, that he is a licenced optician (contrary to the plaintiff’s allegations), that he has not wrongly used the plaintiff’s trademarks, and that he was not involved in the fraudulent practices that the plaintiff alleges.
[24] It is possible that some of these defences have merit, and it is premature to discount them entirely without a full evidentiary record and argument.
Disposition
[25] Based on the foregoing, Mr. Kechichian has not met his burden of proving that he is impecunious, and it is possible that some of his defences may have merit. He is self-represented, and the plaintiffs are claiming over 2M$ in damages against him personally.
[26] In my view, before striking his amended statement of defence, he should be given one last chance to pay the costs ordered against him in this proceeding, including the costs I am awarding to the plaintiff on this motion.
Costs
[27] The plaintiff submitted a costs outline. It claims $26,970.84 on a substantial indemnity basis or $18,233.68 on a partial indemnity basis. The plaintiff’s counsel is an experienced commercial litigation counsel and has been practicing for 24 years. The plaintiff was successful on this motion and there are no reasons not to apply the normal costs rules. I echo Justice Corthorn’s comments, in her Costs Endorsement, that the plaintiff’s motion record and factum were of high quality, the time docketed for the work done appears reasonable and that the hourly rates claimed for senior counsel and a law clerk are reasonable. The only reduction I would make relates to the 2.4 hours claimed to review a 70-page translation of the Kechichian/Savard Asset Purchase Agreement, to which neither party referred me to at the hearing.
[28] I also accept the plaintiff’s submission that Mr. Kechichian needlessly cross-examined his law clerk’s affidavit which was filed for the sole purpose of placing an evidentiary record before this Court.
[29] I fix the plaintiff’s costs in the amount of $17,000 all-inclusive, payable by Mr. Kechichian to the plaintiff forthwith.
Relief Granted
[30] This Court Orders that:
The plaintiff’s motion is allowed.
Mr. Kechichian’s amended statement of defence shall be struck unless, within the next 30 days, he pays the plaintiff $48,455 representing the $31,455 awarded to the plaintiff pursuant to Justice Corthorn’s order of July 23, 2020 and the $17,000 awarded to the plaintiff in this motion.
If Mr. Kechichian has not paid $48,455 to the plaintiff by December 16, 2021, the plaintiff shall send an affidavit to that effect to my attention, along with a draft Order striking Mr. Kechichian’s amended statement of defence, with a copy to Mr. Kechichian.
Associate Justice Kaufman
Date: November 16, 2021
COURT FILE NO.: CV-19-79346 DATE: 2021-11-16 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: 10313033 CANADA INC. v. KECHICHIAN et al
BEFORE: Associate Justice A. Kaufman
COUNSEL: Robert P. Hine, for the Plaintiff Antranik Kechichian, representing himself
ENDORSEMENT
Associate Justice A. Kaufman
DATE: November 16, 2021
[^1]: R.R.O. 1990, Reg. 194, (“The Rules”). [^2]: Bottan v. Vroom, 2001 CarswellOnt 2382, [2001] O.J. No. 2737, 106 A.C.W.S. (3d) 532, at para 26. [^3]: 2008 ONSC 6992, 2008 CarswellOnt 1015, 166 A.C.W.S. (3d) 74, 89 O.R. (3d) 452. [^4]: Tarion Warranty Corp. v. 1486448 Ontario Inc., 2012 ONCA 288, at para 6. [^5]: Schaer v. Barrie Yacht Club, 2003 CarswellOnt 4009, [2003] O.J. No. 4171, at para 11. [^6]: 2311888 Ontario Inc. v. Ross, 2017 ONSC 1295, at para 18.