Court File and Parties

COURT FILE NO.: CV-14-512772-00A1 MOTION HEARD: 1 December 2021 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Rajan Kaushal, Plaintiff AND: Mohammad Sobhi, Defendant /Third Party Plaintiff AND: Toronto Homes and Building Realty Inc., Third Party Defendant

BEFORE: Associate Justice Jolley

COUNSEL: Viktoria Anteby, counsel for the moving third party defendant Toronto Homes and Building Realty Inc. Mohammad Sobhi, self-represented responding third party plaintiff

HEARD: 1 December 2021

Reasons for Decision

[1] The third party defendant Toronto Homes and Building Realty Inc. (“Toronto Homes”) brings this motion for security for costs against the defendant/third party plaintiff Mohammad Sobhi (“Mr. Sobhi”). The parties have a 12 day trial set to commence 21 April 2022. The trial was set to commence in April 2021 but was adjourned by Myers, J. at the request of the plaintiff and Toronto Homes to permit a trial in person and to permit Toronto Homes to bring this motion for security for costs.

[2] Toronto Homes served Mr. Sobhi with the motion record by mail in June 2021 and by personal service in July 2021. It also provided Mr. Sobhi with a copy by email to his son Thomas, who confirmed on this motion that his is the correct email address for service of material on his father. Despite having had the motion materials for many months, Mr. Sobhi did not file any responding material.

[3] Mr. Sobhi appeared via zoom from Iran, I was told. His brother Michael and his son Thomas both attended by zoom. Mr. Sobhi did not have counsel nor did het attend with an interpreter as he was advised to do by Myers, J. His Honour addressed both of these issues in a case conference on 23 April 2021, when he made the following endorsement:

Mr. Sobhi was represented by his son during this case conference. Although the son said that he was simply conveying his father's words, it was clear that he was making submissions, responding to questions, and making arguments as he saw fit in his father's interest. He was not just helping his father to participate.

I accept that using a translator can be difficult and cumbersome. It is common for adult children to aid their parents in court with language issues. But the son is not a lawyer. He is not entitled to represent his father or to function like a lawyer.

The defendant Mohammad Kaushal [sic but intended to reference Mr. Sobhi] is fully welcomed to represent himself in this lawsuit. He cannot be represented by his son.

This is not just a technical concern to protect lawyers. During the case conference, my view of the defendant's case was turned away from his position by his son's submissions. I completely accept that the son is doing his best to protect his father and his family. I accept completely his good faith participation is to aid his father deal with a very stressful problem and to protect the family's assets. But the son is not a trained lawyer. He made submissions that were against his father's interest. His response to my questions about why the costs order remains unpaid were unsatisfactory. His father's financial condition wavered during the submissions. Moreover, the son argued against the justice of requiring his father to pay costs to the defendant whom he views as wealthier and in the wrong. This all suggested that Mr. Sobhi may have the ability to pay and believes he is entitled to refuse to obey a court order.

I order Mohammad Sobhi to participate in all future court proceedings either with a lawyer or with a translator at his own cost. It will be up to each judge or associate judge at each hearing to decide whether, and to what degree, his son may assist.

[4] I permitted Thomas to act as interpreter but he had difficulty staying within the confines of that role and attempted on a number of occasions to make legal and equitable arguments on behalf of his father, something I repeatedly cautioned against.

[5] Toronto Homes brings this motion pursuant to rule 56.01(1)(c) which provides that a court, on motion by a defendant, may make sure order for security for costs as is just where it appears that the defendant has an order against the plaintiff for costs in the same or another proceedings that remain unpaid in whole or in part.

[6] In August 2019 Mr. Sobhi was ordered to pay Toronto Homes costs of $5,500 plus HST (along with costs to the plaintiff of $16,500 plus HST). The costs order was in respect of costs thrown away when Mr. Sobhi’s counsel advised the morning the trial was to start that he could not reasonably rely on the instructions Mr. Sobhi was giving him and brought a successful motion to be removed as counsel.

[7] Those costs remain outstanding. At first, Thomas on behalf of his father, indicated that Mr. Sobhi would consent to a deadline for payment. He then changed his and argued that those costs were not the fault of his father, so that it would be unfair to require him to pay them. He also argued both that his father did not have funds and also that was in Iran to obtain the funds to pay Toronto Homes. I note that none of this was in evidence. Myers, J. got similarly unsatisfactory responses when asked about why those funds had not been paid, as noted in his endorsement, reference above.

[8] The moving party has demonstrated that there is an outstanding costs award in its favour. This does not alone create an entitlement to a security for costs order, as the court considers a number of factors, including assessing “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” before making such an order (Yaiguaje v. Chevron Corp. 2017 ONCA 827).

[9] Toronto Homes has met the initial onus of demonstrating that the case falls within rule 56.01(1)(c). It then falls to Mr. Sobhi to rebut the onus by showing that he has sufficient assets in Ontario or in a reciprocating jurisdiction to satisfy costs; that he is impecunious and that justice demands that he be permitted to continue with this action and that is claim is not plainly devoid of merit; or, if he cannot establish that he is impecunious but does not have assets to meet a costs order, he can satisfy the court on a high threshold of his chances of success (Coastline Corp. v. Canaccord Capital Corp. 2009 CanLII 21758 (ON SC), [2009] O.J. No. 1790 (ONSC).

[10] Mr. Sobhi put forward no evidence on any of these points. Thomas stated that “the court” had frozen Mr. Sobhi’s bank account which had roughly $4,000 in it. There is no evidence of that or any indication of any of the circumstances. Thomas argued that he assumed I would be aware of the circumstances as it was carried out by the court. He then requested time to determine what happened with this account. I declined his mid-motion adjournment request. Mr. Sobhi has had plenty of time to lead this evidence, if it is at all relevant. Further, the April 2022 trial would likely be reached before this motion could be brought back on.

[11] He, or rather Thomas, next argued that he did not have money. This oral submission falls well short of the stringent test to prove impecuniosity. Further, it was contradicted by his later submission there is sufficient (“tons of”) equity in his home (which is the subject matter of this action) to ensure Toronto Homes was paid any costs awarded at the end of the trial. If there was equity in the home which, again, was not in evidence one way or the other, it follows that Mr. Sobhi could have used that equity to pay the outstanding costs award, not to mention the proposed security for costs award, or else demonstrated why that remedy was available to Toronto Homes at the end of the trial but not to him presently or over the last two years.

[12] To the extent there was any evidence of Mr. Sobhi’s means on this motion, it came from the transcript of Ms. Sobhi’s examination for discovery held 9 June 2016 where he stated that he rents out the home in question to four or five tenants. Mr. Sobhi lives on that rental income and on money he brings back from Iran, where he also has rental properties.

[13] Lastly, he argued that this litigation was entirely the fault of Toronto Homes whose agent told him to sign a release that would protect him from any obligation with respect to the sale but which is now being called into question. He did not submit any evidence to explain how the release which was signed 23 May 2014 and on which he now relies, managed to include the plaintiff’s name as buyer, which was not known until three days later when the plaintiff made his offer to purchase on May 26 and to also include the deposit amount of $50,000 which was not negotiated until May 26 or 27. I am not satisfied that Mr. Sobhi has demonstrated a high change of his success at trial.

[14] In all the circumstances, I find it to be in the interests of justice that an order for security for costs issue.

[15] In setting the quantum, the court has discretion to determine what amount is fair and reasonable for the plaintiff to post as security for the defendant’s costs. By way of guideline, the amount should reflect a number that falls within the reasonable contemplation of the parties, what the defendant would likely recover, if successful, and the factors set out in rule 57. (see Hagshama Canada 9 Gold Ltd. v. Decade Urban Communities Corp. 2021 ONSC 5150, referencing 720441 Ontario Inc. v. The Boiler et al 2015 ONSC 4841 at para 56).

[16] Toronto Homes has spent $85,671 over the last seven years in legal fees, disbursements and HST. The figure is not surprising as there have been five days of examinations for discovery, three pretrials and a mediation. The amount will also come as no surprise to Mr Sobhi as he advised me that he had incurred more than $80,000 in legal fees himself, and he has not had counsel since April 2019.

[17] In addition to the $85,671 already spent, Toronto Homes submitted an outline of its expected future costs that totals $35,662.80 inclusive of fees, disbursements and HST. This amount may well be on the conversative side given the trial is set for 12 days.

[18] Based on the above, Toronto Homes estimates its total trial costs at $121,760.37 and calculates its partial indemnity costs at $83,003.61. It seeks security for costs in the amount of $60,000. Having reviewed the bill of existing and future costs, and taking into account what Mr. Sobhi’s commensurate costs have been as a measure of his reasonable expectations of the third party’s legal expenses, I am satisfied that it is fair, reasonable, proportionate and just in all the circumstances that Mr. Sobhi post security for costs on a partial indemnity basis in the amount of $60,000.

[19] Toronto Homes has requested the payment be made by 14 January 2022. I am prepared to order this sum be posted by 31 January 2022. That provides Mr. Sobhi with almost two months to secure funding but ensures Toronto Homes that there are funds posted before it commences in-depth preparation for the April 2022 trial.

[20] I am prepared to include in the order a term that Mr. Sobhi pay the $5,500 plus HST by 14 January 2022. This is a reasonable request by Toronto Homes, as these funds were actually due and payable by September 2019.

[21] The moving party requests that it be permitted to bring a motion without notice to Mr. Sobhi to strike his third party claim if the payments are not made. It may bring a motion but it must be on notice to Mr. Sobhi.

[22] Toronto Homes seeks its costs of the motion on a partial indemnity basis in the amount of $7,300 inclusive of HST and disbursements. I find that amount fair and one that Mr. Sobhi could reasonably have expected to pay.

[23] Order to go in terms of the draft order, which I have amended and signed.

Associate Justice Jolley

Date: 3 December 2021