COURT FILE NO.: CV-19-00615083
DATE: 2021-02-05
ONTARIO SUPERIOR COURT OF JUSTICE
RE: EUGENE BOKSERMAN and MICHAEL SHTAIF, Plaintiffs
-and-
MACDONALD ASSOCIATES PC, KEVIN L. MACDONALD, and JAMIE M. SANDERSON, Defendants
BEFORE: F.L. Myers J.
COUNSEL: Carlo Di Carlo, for the defendants Eugene Bokserman and Michael Shtaif, in person
HEARD: February 4, 2021
ENDORSEMENT
The Motions
[1] The defendants move to dismiss this action because the plaintiffs have failed to post security for costs as ordered by Master Jolley on August 27, 2019.
[2] The Master ordered the plaintiffs to pay into court the sum of $20,000 each by October 29, 2019 as first instalments toward security for costs to be incurred by the defendants to the end of examinations for discovery. She also ordered them to pay the defendants’ costs of the motion of $6,500 in the aggregate by the same date. Finally, she stayed the action until the plaintiffs paid the security for costs and the costs of the motion.
[3] After October 29, 2019 had come and gone, counsel for the defendants has sent routine follow-up correspondence to the plaintiffs inquiring as when they would comply with the Master’s order. The plaintiffs did not respond.
[4] The defendants commenced this motion in August, 2020. The plaintiffs acknowledge that they have not paid the costs or posted security for costs as ordered. They say that they are impecunious. They also seek to vary the order for security for costs, or to appeal it, and to amend their statement of claim to add a number of new allegations against the defendants.
[5] I listened closely to Mr. Shtaif who made the arguments for the plaintiffs. His arguments were eloquently put. But none provided a basis to grant any of the relief that the plaintiffs seek. For the reasons that follow therefore, the action is dismissed.
The Failure to Post Security for Costs
[6] The defendants rely on Rule 56.06 that says:
56.06 Where a plaintiff or applicant defaults in giving the security required by an order, the court on motion may dismiss the proceeding against the defendant or respondent who obtained the order, and the stay imposed by rule 56.05 no longer applies unless another defendant or respondent has obtained an order for security for costs. [Emphasis added.]
[7] In Belende v. Greenspoon, 2008 CanLII 43781 (ON SC), Pollak J. discussed how this rule is approached:
[4] The law is clear that a court will dismiss the action of a party, who does not comply with an Order for security for Costs if that party does not provide the court with a compelling reason to exercise its discretion to grant it another indulgence. There is no evidence or explanation offered by the Plaintiff with respect to any efforts he has made to comply with the Order for security for Costs. The materials filed by the Plaintiff do not address that issue. [Emphasis added.]
[8] In Leonard v. Prior, 1994 CanLII 7510 (ON SC), EM MacDonald J. discussed the quality of evidence required for a plaintiff to provide a compelling reason for failing to post security for costs as ordered:
The plaintiffs must put “their best foot forward”; in my view, these plaintiffs have not done so. The plaintiffs did not contact the defendants’ counsel to seek an extension of time to satisfy the order and it appears that they did nothing until the defendants brought these motions to the actions.
[9] EM MacDonald J. noted that where a plaintiff’s claim of impecuniosity has already been rejected by the judge who made the order for security for costs, a high level of scrutiny is required when the same basis is repeated to explain non-performance:
[23] Campbell J. has already reviewed the plaintiffs’ evidence concerning their ability to raise money to satisfy a security for costs order and found that: “The plaintiff’s evidence is weak, as to his purported inability to raise money for the purposes of the litigation.” Cross-examination held of the plaintiff Leonard, prior to the motion before Campbell J., raised serious issues about the credibility of his claim of impecuniosity. Mr. Herschorn argues that the plaintiffs should have more time to deal with non-conventional, but marketable, property in the form of assets presently owned by either Leonard or Leonard Films. Given the concerns expressed by the court on the credibility of Mr. Leonard, the request for more time to deal with non-conventional, but marketable property, must receive acute scrutiny from the court. The affidavit of Leonard does not survive acute scrutiny. It falls far short of discharging the onus of explanation facing the plaintiffs. They have not brought forward an acceptable and credible proposal to rectify the default. In these circumstances, the defendants succeed under rule 56.06. [Emphasis added.]
[10] Pollak J. was looking for evidence of good faith efforts to comply with the outstanding order. There are none here. EM MacDonald J. looked for communications by the plaintiffs advising the defendants of their problems complying and a “credible proposal to rectify the default”. The plaintiffs did not offer evidence of any of these things.
[11] The plaintiffs submit that the claim against the defendants is for lawyers’ negligence in their handling of a civil appeal. The outcome of the appeal was that another party has a multi-million dollar judgment against them. This renders them impecunious.
[12] This issue was dealt with before the Master. She quoted the burden on the plaintiffs to establish impecuniosity discussed by Master Glustein (as he then was) in Coastline Corporation Ltd. v. Canaccord Capital Corporation, 2009 CanLII 21758 (ON SC):
(viii) The evidentiary threshold for impecuniosity is high, and "bald statements unsupported by detail" are not sufficient. The threshold can only be reached by "tendering complete and accurate disclosure of the plaintiff's income, assets, expenses, liabilities and borrowing ability, with full supporting documentation for each category where available or an explanation where not available" (Uribe, at para. 12; Shuter v. Toronto Dominion Bank, 2007 CanLII 37475 (ON SC), [2007] O.J. No. 3435(S.C.J. - Mast.) ("Shuter") at para. 76);
(ix) To meet the onus to establish impecuniosity, "at the very least, this would require an individual plaintiff to submit his most recent tax return, complete banking records and records attesting to income and expenses" (Shuter, at para. 76):
(xi) Consequently, full financial disclosure requires the plaintiff to establish 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 plaintiffs to borrow funds, and details of any assets disposed of or encumbered since the cause of action arose (Morton v. Canada (2005), 2005 CanLII 6052 (ON SC), 75 O.R. (3d) 63 (S.C.J.) at para. 32); [Emphasis added]
[13] Master Jolley made the following findings on the evidence that was before her:
[30] The plaintiffs were aware, then, that if they intended to advance a defence of impecuniosity, they were required to include in their own responding materials evidence of their means, including disclosure of the amount and source of their current income, a description of their assets and their value, a list of their expenses, all with full supporting documentation, their most recent income tax returns and complete banking records. None of this material was in the record.
[31] The plaintiffs defended this motion on the basis that they were impecunious. In light of the complete absence of evidence required to support that defence, I find that the plaintiffs have not demonstrated that they are impecunious. Therefore, I need not go on to consider whether their action is not devoid of merit.
[14] Before the Master as before me, the plaintiffs made no disclosure of their finances, let alone “their most recent income tax returns and complete banking records.” Their pleas of impecuniosity are bald and unsupported by required evidence. They are businessmen who engaged in high value international transactions. Merely reciting the judgment liability does not begin to address the burden upon them to show that they are impecunious.
[15] Moreover, as discussed by Glustein J., the burden of proof of impecuniosity also includes showing that the plaintiffs cannot raise funds to support the lawsuit. Mr. Shtaif submitted orally that they cannot get credit due to the outstanding judgment. Neither plaintiff said this in sworn evidence or provided any back-up documents to support this assertion. However, there was evidence below concerning the transfer of houses by both plaintiffs to their respective spouses. There is no evidence that either plaintiff has sought to raise funds using these assets to support the modest amounts ordered by the Master.
[16] In all, unless the plaintiffs succeed on their cross-motions to defer or relieve them of the obligation to post security for costs, I am satisfied that they have not shown a credible, compelling, or cogent basis to excuse their failure to comply with the order made by Master Jolley.
Motion to Amend the Statement of Claim
[17] I declined to hear the plaintiffs’ motion to amend their statement of claim at this time. In their notice of motion, the plaintiffs state that they wish to plead “additional new causes of action and allegations for the errors and negligent conduct committed by MacDonald Defendants that just became known to the Respondents in or about January 2020”.
[18] The appeal that is the subject of the plaintiffs’ allegations was argued more than four years ago in October, 2016. The motion to amend to add new causes of action is infused with issues of tenability, credibility, re-litigating, and limitation period discoverability among others.
[19] The motion to amend is properly returnable before a Case Management Master. But it cannot be brought as yet because the action is stayed by Master Jolley’s order.
[20] All that is properly before me is the defendants’ motion to dismiss and, as discussed below, possibly the cross-motions to defer or undermine the Master’s order.
The Plaintiffs are Self Represented Litigants
[21] Paragraphs 32 and 33 of the plaintiffs’ factum say [footnote omitted]:
- Further, the Canadian Judicial Council "Statement of Principles on Self-Represented Litigants and Accused Persons" (adopted September 2006) states as follows:
B. PROMOTING EQUAL JUSTICE STATEMENT: Judges, the courts and other participants in the justice system have a responsibility to promote access to the justice system for all persons on an equal basis, regardless of representation, and specifically, but not limited to: (
b) Self-represented persons should not be denied relief on the basis of a minor or easily rectified deficiency in their case. [Emphasis added]
- It is respectfully submitted that the failure to comply with the Statement of Principles on Self- Represented Litigants would undermine the court's responsibility and obligation to the self- represented litigants and would unjustly and unfairly prejudice the Plaintiffs' rights to seek relief, impartiality and judicial fairness from this Honourable Court. [Emphasis in original.]
[22] This is a common statement in factums filed by self-represented litigants. There is no doubt that the court is aware of and bound by the CJC principles. They express an important recognition that access to justice means access for everyone whether represented by a lawyer or not. They also carry an implicit recognition that self-represented parties opposing a lawyer are not facing a level playing field.
[23] There is no way (nor is it desirable) to level the playing field to counteract the lawyers’ years of legal education and decades of training and experience in the art of advocacy.
[24] Rather than counteracting the advantage of lawyers’ expertise, self-represented parties’ positions can be enhanced to some degree by assistance from the court. But judges cannot and must not become a party’s lawyer. The judge must remain independent and neutral at all times.
[25] Among the many principles set out by the CJC is the following guidance for judges specifically dealing with hearings:
For the Judiciary
Judges have a responsibility to inquire whether self-represented persons are aware of their procedural options, and to direct them to available information if they are not. Depending on the circumstances and nature of the case, judges may explain the relevant law in the case and its implications, before the self-represented person makes critical choices.
In appropriate circumstances, judges should consider providing self-represented persons with information to assist them in understanding and asserting their rights, or to raise arguments before the court.
Judges should ensure that procedural and evidentiary rules are not used to unjustly hinder the legal interests of self-represented persons.
[26] What I understand from the principles cited above, is that the court is to ensure that all litigants before the court understand what is at issue. They may need the court’s assistance to ensure that they understand what is required of them to advance or to respond to the issues before the court. They should not be denied relief due to technical, minor, easily-resolved deficiencies in their cases. This is but a specific application of Rule 1.04 and the court’s general desire to seek justice on the merits especially where costs or an adjournment may solve a technical or procedural problem.
[27] However, the CJC principles do not relieve self-represented litigants from complying with the law. The law applies equally to all. The CJC principles are not a trump card that self-represented litigants get to play when the law stands in their way.
[28] Furthermore, the CJC principles are not a sword to be wielded as a threat to try to induce judicial favour.
[29] In this case, I have already commented on the failure of the plaintiffs to adduce evidence on their financial status. I did not offer an adjournment to allow them to supplement the record. This is because their failure to adduce evidence was made clear to them already by Master Jolley who quoted Glustein J. at length. Moreover, having heard the plaintiffs and read their material, there is no doubt that they understand both the process and the relative burdens. They are not willing to produce documents or to be examined on their financial affairs and they understand the consequences of that position.
[30] Similarly, I am not hearing their motion to amend. However, I know that if they actually have newly discovered rights, then they have other remedies. That is just a question of timing.
[31] The plaintiffs ask for leave to appeal Master Jolley’s order for security for costs. Under Rule 56.05, the right to appeal the order for security for costs should have been excepted from the stay ordered by the Master unless she ruled to the contrary. But the formal order does not contain the exception. So, despite Mr. Di Carlo submitting that the plaintiffs did not need leave to appeal, the stay as actually ordered says that they do.
[32] In para. 35 of her reasons Master Jolley ordered that “The plaintiffs shall take no further step in this action until this order for security for costs and costs is satisfied.” Absent a specific reference to an appeal from the order itself, I would not read that sentence as preventing an appeal. On my reading therefore, the stay in the formal order as drafted and signed appears to have been too broad.
[33] Although the plaintiffs have acquired a great deal of familiarity with legal concepts and the Rules of Civil Procedure, (although perhaps not as much as they believe) I would not expect them to know that a stay of an appeal from a security for costs order needs to be specifically ordered. I would be inclined to view the stay as a light hurdle all other things being equal.
[34] However, the plaintiffs have taken almost 16 months to bring on this proposed appeal. Rule 62 required that an appeal be commenced within one week.
[35] In light of the potential for confusion and the arcane intersection of several rules of procedure, this is a good example of a place where a judge can cut through technicalities to hear a matter on the merits. An adjournment will not make this process any better. I will deal with the appeal and its timing below notwithstanding the confusion as to whether it was stayed.
[36] In addition, the plaintiffs seek to defer or vary the Master’s order. They do not recite grounds under Rule 59.06 in their 30 page notice of motion. Neither have they brought the motion before the Master as they ought to have done in the first instance. Again however, once I am looking at the order on the merits, in conjunction with the plaintiffs’ grounds for not complying wit it (such as they are), and an appeal (or leave to appeal or an extension of the time to appeal), it strikes me as unfair to consider dismissing the action without considering to some degree whether on the evidence and the equities, the order ought to be deferred or varied. I suspect that every judge would consider the ongoing justness of the circumstances at least tacitly before dismissing the action in any event. I am just doing it overtly in deference to self-represented parties and, in particular, to ensure that they know that their arguments were heard and considered.
Leave to Appeal or an Extension of Time to Appeal
No Basis to Extend the Time to Appeal
[37] There is no evidence before the court to show that the plaintiffs formed an intention to appeal with in the one week appeal period. Moreover, apart from confusion over whether they needed leave to appeal, there is no excuse provided for their delay. They could have moved for leave to appeal, if necessary, months ago.
[38] On their own, these two findings would preclude an appeal at this very late date. As Mr. Shtaif spent the majority of his time dealing with the merits however, I will deal with them as well. An assessment of the likely merits of the plaintiffs’ claim against the defendant lawyers is an element of all of the relief that the plaintiffs seek.
The Claim does not have a Good Chance of Success
[39] The Master found that there was good reason to believe that the plaintiffs’ action is frivolous and vexatious. The action arises from an appeal as noted above. In the case appealed, the plaintiffs were found by the trial judge to have committed fraudulent misrepresentation and conspiracy among other wrongdoing. The plaintiffs had some success at the Court of Appeal with the defendants’ representation. But the fraud and conspiracy findings were upheld.
[40] The plaintiffs then sued their trial lawyers. That action has been dismissed on summary judgment. Now they sue their appeal counsel. The serial suing of parties arising from the same event is a recognized sign of a vexatious litigant as discussed by the Master.
[41] Of equal or greater significance to me, is that Mr. Shtaif confused the merits of his initial case with the merits of the Master’s decision. That is, like many vexatious litigants, Mr. Shtaif cannot let go of the initial trial. Much of the hearing before me was spent telling me the many reasons why the plaintiffs should have won the initial trial. They say they have unearthed numerous frauds abroad which they may try to establish to re-open the trial. Whether true or not, none of that was on point at all.
[42] Before the appeal, Mr. Shtaif provided the defendants with his 161 page assessment of the initial trial decision. He also insisted that appellate counsel refer to every place where he believes something was said or proven that was not pleaded and ran afoul of the rule in Rodaro v. Royal Bank of Canada, 2002 CanLII 41834 (ON CA) against finding liability on unpleaded grounds.
[43] What Mr. Shtaif does not understand is the role of judgment and the art of advocacy. He thinks that by showing that appeal counsel did not put his 161 pages and his list of unpleaded facts before the Court of Appeal, they are liable. However, counsel are not liable just for not arguing the list of facts and arguments that the client provides. If the client wants counsel to mouth his words, he can argue the case himself.
[44] The plaintiffs have listed extensive allegations against appellate counsel in the notice of motion to try to show how strong the case against the defendants is for the purposes of the security for costs motion.
[45] The reality however, is that the longer the list of errors alleged, the less consequential they appear. The litany of allegations set out in the plaintiffs’ notice of motion is testament to Mr. Shtaif’s detail orientation, patience, and persistence. But Rodaro does not require every single piece of evidence or fact to be pleaded. Neither would any competent appellate lawyer accept 161 pages of instructions from clients to guide an appeal nor the multi-page list set out in the notice of motion. That would be malpractice.
[46] This is not a motion for summary judgment. I make no findings on the actual claims against the defendants. This decision deals with a high level assessment of the merits for the purposes of considering security for costs, extending the time for appeal, or granting leave to appeal. Having read the evidence and heard the argument, I see no basis at all to find that the plaintiffs have a good chance of success in establishing that their appellate counsel violated the standard of care applicable to appellate counsel in Ontario in 2016. The plaintiffs have put nothing before the court to establish the relevant duty or that it was breached.
[47] In addition, Mr. Shtaif makes arguments based on technicalities of corporate form, on personal liability of corporate officers for torts in which they participated, and he refers to cases that he claims were not argued by his counsel on appeal. Yet, they are referred to in the Court of Appeal’s decision. Moreover, with findings of fraud and conspiracy against them, their role as corporate officers and the corporate veil are irrelevant. People are liable for their own frauds and conspiracies no matter their roles or capacities.
[48] I agree with the Master that in the circumstances, this claim appears to be frivolous and vexatious.
The Merits of an Appeal from the Master
[49] On an appeal, this court will not interfere with a Master’s order absent an error of law or a palpable and overriding error of mixed fact and law or fact. The term palpable and overriding expresses deference. In a deferential assessment of findings involving facts, this court will not overrule a finding unless if is obviously wrong in the sense that there was no evidence at all to support it. In addition, the erroneous finding must be of central importance to an outcome before the appeal court will intervene.
[50] I do not agree with Mr. Shtaif that the Master erred in law by failing to consider whether the plaintiffs had a good chance of success. He is correct that in finding that the plaintiffs were not impecunious, at para. 31 of her decision set out above, the Master did go on to find that she did not have to consider whether the action was “devoid of merit”. But that does not mean that she failed to consider the chances of success as she was required to do for plaintiffs who have financial means.
[51] The Master assessed the merits of the plaintiffs’ claim in paras. 14 to 17 of her decision. As I mentioned previously, she found that it was likely frivolous and vexatious. She based her holding principally on the finding that the Court of Appeal had already ruled against the main argument that the plaintiffs say their counsel failed to make. Before me, Mr. Shtaif argued that the Master got it backwards. The plaintiffs did not complain that counsel did not make a particular argument; they complain that he made that one in particular instead of others. But I have read the statement of claim and the factum that was before the Master. It is the plaintiffs who are trying to reverse field now. The Master plainly got the argument that was put to her correctly.
[52] The Master correctly recited the law and she took the correct step back to consider the overall justice of the case as required by the Court of Appeal in Y'aiguaje v. Chevron Corporation, 2017 ONCA 827 (that she cited). There was ample evidence before the Master for her findings of fact and mixed fact and law. Moreover, she made no error in principle in the exercise of her discretion on the facts as found.
[53] I do not see any apparent merit in an appeal from the Master. I have also considered the Master’s decision on my own untethered from the grounds advanced by the plaintiffs. I still see no basis for an appeal.
[54] Absent a basis to extend the time, any error in the assessment of the merits of the plaintiffs’ claim against the defendants, and any error in the Master’s decision ordering security for costs, it follows that the plaintiffs’ efforts to review that order must fail.
Should I stay or Vary the Master’s Order Today Forward?
[55] A stay requires proof that there is a serous issue to be tried in the case; proof that absent a stay a party will suffer irreparable harm; and an assessment of who would be harmed more by the granting or refusal to grant the order sought (the “balance of convenience”).
[56] The “serious issue to be tried” standard is a minimal hurdle. It is not made out by a frivolous and vexatious case. If this case surmounts the hurdle, it is squeakily close.
[57] The plaintiffs argue that the dismissal of the claim for failure to post security for costs is itself irreparable harm as their remedy will be lost for good.
[58] The balance of convenience however strongly supports a denial of a stay. If I grant the stay, plaintiffs, who are not impecunious, will be able to continue litigation without posting security for costs as ordered. If I deny the stay, an order of this court will be carried out in accordance with the Rules and as expected and required by the Master. In the absence of a powerful case on the merits, bona fide efforts to explain the inability to comply with the order, a timely appeal or motion to vary on evidence establishing compelling grounds, and with the continued refusal of the plaintiffs to disclose their finances, I see no reason to stay the order for security for costs.
[59] For all the same reasons, there is no basis in fact or law to vary the order.
Outcome
[60] The action is dismissed. The plaintiffs’ motions are dismissed except the motion for leave to amend the statement of claim that was not heard. It is now moot in this action.
[61] The defendants seek $6,000 in costs on a partial indemnity basis. Mr. Di Carlo advises that with the prior costs award of the Master, this is in effect costs of the entire action from the defendants’ perspective. In my view, the amount sought is very reasonable for the motion alone let alone other assessable steps covered by the Tariffs. The plaintiffs are therefore jointly and severally liable to the defendants for their costs of this action in the amount of $6,000 all-inclusive. For clarity, this is in addition to any costs ordered previously.
[62] Finally, I wish to add that I make no findings at all about the possible allegations of fraud that the plaintiffs may make to try to re-open their initial trial. Nothing I have said is meant to have any impact on any decision that the trial judge may be asked to make concerning the trial.
F.L. Myers J.
Date: February 5, 2021