COURT FILE NO.: CV-17-24943 DATE: 20220318 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
Manmeet Chahal Plaintiff – and – Sara Abdullah, Peter Cunnington, Robert Lovegrove and Holland Clark Defendants
Counsel: Karen Hulan, for the Plaintiff Peter Danson, for the Defendant, Peter Cunnington
HEARD: November 10, 2021 Via Zoom
RULING ON MOTION
CARROCCIA J.
Introduction
[1] The defendant, Peter Cunnington (the “defendant/moving party”), brought a motion for an order staying or dismissing the plaintiff’s (the “plaintiff/responding party”) action against him or alternatively an order requiring the plaintiff to post security for defence costs incurred up until trial without prejudice to seek additional security for costs at a later date, pursuant to rr. 56.02 and/or 56.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (“Rules”).
[2] On October 21, 2021, I released a Ruling on a Preliminary Issue that arose in this matter. I ruled that the Supplementary Affidavit of Roland Kuehn, sworn September 17, 2021, could not be used as evidence on this motion because it was filed late, not in accordance with the timetable agreed to by the parties, and after the moving party’s factum was filed. Accordingly, it was not considered by the court in deciding this motion.
Factual Background
[3] The plaintiff is 35 years old, was born in the city of Toronto, and grew up in Brampton, Ontario. He attended university in London, Ontario and then attended Western Michigan University Cooley Law School graduating in 2015. He was called to the bar in Michigan in July 2015 and currently practices law and resides in Troy, Michigan.
[4] The plaintiff was involved in a multi-vehicle accident which occurred on Highway 403 outside of Mississauga, Ontario on May 26, 2015. The plaintiff claims that he suffered injuries in the motor vehicle accident (“MVA”) including a dislocated left shoulder, a herniated disc in his neck, and musculoskeletal damage to his neck, back, left arm, and hand. This action was issued in Windsor on April 26, 2017. Each of the defendants served and filed defences and crossclaims.
[5] Discoveries were conducted in 2018 following which the actions and crossclaims as against the defendants, Sarah Abdullah and Holland Clark, were dismissed on consent.
[6] The defendant alleges that he made repeated efforts to obtain answers to outstanding undertaking and production requests following discovery including in relation to a medical report; some of those productions have been complied with, others have not. As a result, counsel for the defendant advised counsel for the plaintiff that this motion would be brought. The Motion Record was served on the plaintiff on March 16, 2021, and the motion was originally returnable on April 27, 2021.
[7] Plaintiff’s counsel was asked pursuant to r. 56.02 to declare, in writing forthwith, whether her client was ordinarily resident in Ontario. Counsel for the plaintiff sent an email indicating that her client resided in Michigan. Counsel was asked whether that meant that he was “ordinarily” resident in Michigan, but plaintiff’s counsel did not reply.
[8] The defendant further states that the medical evidence produced by the plaintiff does not establish a link between the injury suffered by the plaintiff and the MVA in May 2015. The plaintiff initially claimed that he first sought medical treatment from his family doctor on July 14, 2015, due to neck pain, but a review of Dr. Malhotra’s records reveals that during that visit, the plaintiff was treated for bronchitis and there was no notation made in relation to the MVA.
[9] The plaintiff sought out medical treatment at a Windsor hospital on August 23, 2015. He indicated at that time that he had been playing basketball three days earlier and began experiencing shoulder pain. He returned to the hospital due to increased pain on August 29, 2015, at which time the hospital recorded in their notes that he indicated to them he had been lifting weights and thereafter experienced pain. At discovery, the plaintiff denied he was lifting weights, but claimed he was performing other exercises without weights.
[10] The plaintiff was diagnosed with a herniated disc and underwent disc fusion surgery in late August 2015. He received no medical treatment between September 26, 2015 and April 17, 2017, and had resumed his lifestyle (at least pre-pandemic) which included work, physical training, travelling internationally, and playing golf.
[11] The plaintiff did not swear an affidavit personally for use on the motion; instead, he relies on the affidavit of Roland Kuehn, a lawyer with Beckett Personal Injury Lawyers who represents the plaintiff.
[12] In his affidavit sworn July 5, 2021, Mr. Kuehn states that at para. 3 of his Statement of Claim, the plaintiff states that he is a resident of Troy, Michigan. Further, in the same affidavit, Mr. Kuehn refers to the evidence given by the plaintiff during his examination for discovery wherein he stated that he attended law school at Western Michigan University, worked and resided in Michigan since 2012, and that it has been clear since the outset of the litigation that the plaintiff ordinarily resides in Michigan.
[13] In that affidavit, Mr. Kuehn avers to the fact that he believes that the plaintiff has sufficient assets to satisfy the defendant’s costs as outlined in the Notice of Motion. Furthermore, he indicates that documentary proof of the assets would be submitted in a supplementary affidavit which would be provided to the Motions judge, and which counsel would seek to have sealed to prevent the documentation from becoming part of the court file. This was not done.
[14] The plaintiff takes the position that the medical records, including the records relating the surgery performed on the plaintiff on August 31, 2015, support his position that he suffered permanent and serious injuries as a result of the MVA.
The Position of the Parties
[15] The moving party takes the position that based on the medical productions to date and the plaintiff’s failure to produce any medical records that link the herniated disc in his neck to the MVA, this claim is without merit and is frivolous or vexatious.
[16] Furthermore, the defendant takes the position that the plaintiff is not impecunious, it appears that he is not ordinarily resident in Ontario, and that there is no evidence that the plaintiff has any assets in Ontario to pay the defendant’s costs. The defendant is therefore seeking an order that the plaintiff post security for costs in the amount of $17,810.93, which represents a calculation of costs for work done to date and the anticipated work to be done going forward to prepare for trial, including HST and disbursements on a partial indemnity scale.
[17] The plaintiff does not dispute that he is ordinarily resident outside of Ontario. He asserts that he has assets in a reciprocal jurisdiction and is not impecunious. He takes the position that he has suffered permanent and serious impairment of an important physical, emotional, or psychological function as a result of the MVA and accordingly, his claim is not without merit, frivolous, or vexatious. He submits that if the defendant disputes this, he can bring a “threshold” motion at trial, but a motion for security for costs is not the proper forum to address the issue.
[18] Furthermore, the plaintiff argues that the defendant has not requested, nor has he arranged, for the completion of a defence medical examination.
The Legal Principles
[19] The defendant relies on r. 56.01(1)(a) and (e), and r. 56.02 which state:
56.01 (1) The court, on motion by the defendant or respondent in a proceeding, may make such order for security for costs as is just where it appears that,
(a) the plaintiff or applicant is ordinarily resident outside Ontario;
(e) there is good reason to believe that the action or application is frivolous and vexatious and that the plaintiff or applicant has insufficient assets in Ontario to pay the costs of the defendant or respondent.
Declaration of Plaintiff’s or Applicant’s Place of Residence
56.02 The lawyer for the plaintiff or applicant shall, forthwith on receipt of a demand in writing from any person who has been served with the originating process, declare in writing whether the plaintiff or applicant is ordinarily resident in Ontario and, where the lawyer fails to respond to the demand, the court may order that the action or application be stayed or dismissed.
[20] Rule 56.04 gives the court discretion to determine the amount and form of the security as well as the time to pay the amount into court, and r. 56.07 provides that the amount of security required by an order may be increased or decreased at any time.
[21] The application of r. 56.01 requires the court to employ a two-step process during the inquiry to determine whether it would be appropriate to make an order for security for costs. First, the initial onus is on the defendant or moving party to establish that the circumstances fall within one of the enumerated categories set out in r. 56.01(1)(a)-(f): see Chachula v. Baillie (2004), 69 O.R. (3d) 175 (S.C.), at para. 10. The onus on the defendant is not a high one. The defendant must establish that “it appears” that the circumstances fall within one of the enumerated categories.
[22] Once that has been established, the onus shifts to the plaintiff to establish that the order is unnecessary or would be unjust: see Chill Media Inc. v. Brewers Retail Inc., 2021 ONSC 1296 (“Chill Media”), at para. 9.
[23] The plaintiff can meet their onus by demonstrating that any of the following circumstances apply as outlined by Trimble J. in Air Palace v. Abdel, 2021 ONSC 7882 (“Air Palace”), at para 27 (c):
i) the plaintiff has appropriate or sufficient assets in Ontario or in a reciprocating jurisdiction to satisfy an order of costs made in the litigation;
ii) the plaintiff is impecunious and that justice demands that the plaintiff be permitted to continue with the action … [because] the claim is not “plainly devoid of merit”; or
iii) if the plaintiff cannot establish that it is impecunious, but the plaintiff does not have sufficient assets to meet a costs order, the plaintiff must meet a high threshold to satisfy the court of its chances of success.
[24] Furthermore, as to the merits of the case, Trimble J. goes on to say, at paras. 27(g) and (h):
The merits of the case have a role in any application under Rule 56.01, but on a continuum. Where the motion is based on r. 56.01(1)(a), the merits of the case are at the low end. Where the motion is based on r. 56.01(e), the merits of the case are at the high end (Padnos at para. 4 and Bruno at para. 36);
If a Plaintiff demonstrates impecuniosity, he can resist the motion for security for costs by showing that the claim is not plainly devoid of merit. If the Plaintiff does not establish impecuniosity, the Plaintiff must meet a higher standard, namely that the case has a good chance of success (see: Michailidis v. Vertes, 2019 ONSC 6440, at para. 6, and Zeitoun v. Economical Insurance Group at paras. 49-50).
[25] In order to determine whether the plaintiff has assets to satisfy an order for costs in Ontario or a reciprocating jurisdiction, the court can only rely on the evidence before it to make that determination. In this case, I was provided with affidavits of counsel.
[26] An affidavit for use on a motion must comply with r. 39.01(4), which states:
Contents — Motions
(4) An affidavit for use on a motion may contain statements of the deponent’s information and belief, if the source of the information and the fact of the belief are specified in the affidavit.
[27] Where the facts are significantly contested, an affidavit from someone other than an individual with direct knowledge of the circumstances may be of little assistance to the court. The affidavit of counsel who swears that “he is advised by the plaintiff and verily believes that he has sufficient assets to satisfy the defendant’s costs” is devoid of detail, based on hearsay, and of little assistance.
[28] A determination of sufficiency of assets must be based on the evidence provided. In Chill Media, at para. 10, Perell J. said:
Where the defendant relies on the plaintiff or applicant having insufficient assets in Ontario to pay costs, the onus of proof on the defendant is modest and he or she must just show that there is a basis for concern about the sufficiency of assets.
[29] The plaintiff can also resist an order for security for costs by establishing that on the totality of the circumstances, it would be unjust to make such an order.
[30] In Yaiguaje v. Chevron Corporation, 2017 ONCA 827, the Court of Appeal for Ontario reminds us that it is necessary to consider all of the circumstances before making an order for security for costs including the interests of justice, at para. 22:
In deciding motions for security for costs judges are obliged to first consider the specific provisions of the Rules governing those motions and then effectively to take a step back and consider the justness of the order sought in all the circumstances of the case, with the interests of justice at the forefront. While the motion judge concluded that an order for security for costs would be just, with respect, she failed to undertake the second part of that analysis. The failure to consider all the circumstances of the case and conduct a holistic analysis of the critical overarching principle on the motion before her constitutes an error in principle. It therefore falls to this panel to conduct the necessary analysis of the justness of the order sought.
[31] The court goes on, at para. 24, to outline some of the factors to be taken into account in determining whether making an order for security of costs would be just including:
i) the merits of the claim,
ii) delay in bringing the motion;
iii) the impact of actionable conduct by the defendants on the available assets of the plaintiffs;
iv) access to justice concerns; and
v) the public importance of the litigation.
[32] This list of factors is not meant to be exhaustive, or exclusive, but rather instructive. Courts should approach the issue in a “holistic” way by considering all of the relevant circumstances in a given case.
[33] When considering whether delay is a factor, the court should review the reason for the delay and any prejudice caused to the plaintiff as a result. In Wilson Young & Associates Inc. v. Carleton University et al., 2020 ONSC 4542, Associate Justice Fortier sets out the applicable test for delay, at para. 59:
The principles to be applied when considering the effect of a moving party’s delay in bringing a motion for security for costs can be summarized as follows:
a) A motion for security for costs must be brought promptly by the defendant upon discovering that it has a reasonable basis for bringing the motion. A plaintiff ought not be placed in the position of having to post security for costs after having incurred significant expense in advancing the lawsuit.
b) The moving party should not be entitled to an order for security for costs if there is evidence that the delay in bringing the motion caused prejudice to the plaintiff.
c) Even in the absence of prejudice to the plaintiff, a failure by the moving party to provide an explanation for the delay is fatal to the motion.
[34] Having reviewed the applicable legal principles, I now propose to apply them to the circumstances of this motion.
Analysis
Should the action be stayed or dismissed pursuant to r. 56.02?
[35] The court has a discretion to stay or dismiss the action pursuant to r. 56.02 where a demand is made and the lawyer for the plaintiff fails to declare whether the plaintiff is ordinarily resident in Ontario.
[36] In this case, counsel for the plaintiff indicated in writing, in response to the demand made, that “Mr. Chahal resides in Michigan.” Furthermore, based on the evidence given by the plaintiff himself at discovery, he clearly resides in Michigan.
[37] There is very little judicial consideration of this rule. The rule clearly provides for a remedy where “the lawyer fails to respond to the demand”. In the circumstances of this case, the lawyer for the plaintiff responded to the demand, but did not use the word “ordinarily” in her response. This cannot be said to be a failure to respond.
[38] In my view, the lawyer for the plaintiff complied with the requirement of the rule by responding to the demand even if she did not use the word “ordinarily” in her response. As a result, the action will not be stayed or dismissed pursuant to r. 56.02.
Has the defendant met his onus pursuant to r. 56.01(1)?
Ordinarily Resident Outside of Ontario
[39] In this case, the defendant relies on r. 56.01(1)(a) and (e), that is, that the plaintiff is not ordinarily resident in Ontario and that the action is frivolous or vexatious and the plaintiff has insufficient assets in Ontario to pay the costs of the defendant in support of his motion.
[40] The fact that the plaintiff is not ordinarily resident in Ontario is not in question; it is acknowledged by the plaintiff. This ground alone is sufficient to satisfy the onus on the moving party pursuant to r. 56.01(1)(a). The onus is low and requires the defendant to establish that “it appears” that the defendant has satisfied the requirements of one of the categories outlined in that rule.
Merits of the Action
[41] As for the application of r. 56.01(1)(e), first the court must consider whether there is good reason to believe that the action is frivolous or vexatious. This requires an assessment of the merits of the action based on the available record, which includes the statement of claim and defence and the additional evidence provided for use of the motion, including excerpts from examination for discovery, the affidavits of counsel, and medical records.
[42] Causation is clearly a live issue in this case. The position of the plaintiff is that the injuries to his neck, which ultimately required surgery, were incurred as a result of the MVA. The defendant points to the delay of about three months in obtaining medical treatment and the potentially intervening events that may have caused the injury and argues that the lack of evidence on causation is clearly fatal to the action.
[43] While causation is an issue, I cannot say that the claim is clearly frivolous or vexatious. To do so would require a finding that the claim is “clearly devoid of merit”: Air Palace, at para. 63. An assessment on the merits is not akin to a Motion for Summary Judgment where a more in-depth analysis is conducted. Likewise, it is not appropriate to determine issues of credibility based on the affidavits of counsel. In this case, credibility will be an issue at trial.
[44] Having found that the defendant has met his onus in relation to r. 56.01(1)(a), the onus shifts to the plaintiff to establish that the order is unnecessary, or it would be unjust in the circumstances of this case to order security for costs.
Has the plaintiff discharged his onus?
Assets in the Jurisdiction
[45] The plaintiff is clearly not impecunious, since the evidence establishes that he is gainfully employed. The defendant argues that the plaintiff does not have any assets in the jurisdiction to satisfy any order of costs that might be made. In this case, the plaintiff has provided no evidence to establish that he has assets in this jurisdiction or a reciprocating jurisdiction to satisfy any potential order for costs. The plaintiff elected not to swear an affidavit in support of his position on this motion and relies on the affidavit of counsel and the general hearsay statements contained in that affidavit.
[46] The statement of counsel in an affidavit, without any evidence in support, in my view is not sufficient to discharge the onus on the plaintiff, and I find that he has failed to do so.
Merits of the Claim
[47] As indicated above, I have found that the claim is not clearly frivolous or vexatious; however, where the plaintiff has failed to establish that he is impecunious or that he has sufficient assets to satisfy any order for costs, the merits of the claim take on increased importance and warrant closer scrutiny. The plaintiff must do more than establish that the claim is not frivolous or vexatious; he must establish that the claim has a good chance of success.
[48] In Chill Media, at para. 14, Perell J. set out the test in this way:
Where impecuniosity is shown, to avoid having to post security for costs, the plaintiff needs to demonstrate only that his or her claim is not plainly devoid of merit. Conversely, where the plaintiff fails to show that he or she is impecunious, then to avoid posting security, he or she will have to demonstrate a stronger case on the merits or some other reason to justify the court not ordering that security be posted. If the plaintiff shows a real possibility of success, then the court may conclude in the circumstances of the case, justice demands that he or she not be required to post security.
[49] In this case, there is a clear issue related to causation. As I indicated above, the action is not clearly frivolous or vexatious; however, the lack of medical evidence to connect the injury to the accident, as well as the fact that this credibility will be a significant issue in this matter, means that I cannot find that there is “a real possibility of success”. Accordingly, the plaintiff has failed to discharge his burden on this ground as well.
[50] Having found that the defendant has met his onus and the plaintiff has not discharged his onus, the court must go on to determine whether it would be just to make an order for security for costs in the circumstances of this case. The plaintiff argues that the delay in bringing the motion would render the order for security for costs unjust.
Delay in Bringing the Motion
[51] A motion for security for costs should be brought promptly. In this case, the defendant relies on the failure of the plaintiff to complete productions following discovery in 2018 as a significant reason for the delay. The defendant claims that some production was not made until August 2020 despite repeated requests.
[52] The defendant also points to the delays caused by the Covid-19 pandemic. It is clear that the pandemic has resulted in various lockdowns in the last two years as well as delay in court proceedings. The unfortunate effect of these delays is that civil matters have taken a backseat to family and criminal matters which were given priority.
[53] Counsel for the defendant made plaintiff’s counsel aware that this motion would be brought and served the Motion Record on March 16, 2021. The matter was originally returnable on April 27, 2021 but was adjourned at the request of the plaintiff.
[54] The plaintiff claims that the defendant has unreasonably delayed the bringing of this motion which has been unfair to him. The defendant knew that causation would be an issue at the time that discoveries were completed, and yet he chose to delay filing this motion. The plaintiff does not rely on any actual prejudice.
[55] Even in the absence of actual prejudice, the absence of an explanation for the delay would be fatal to the motion. In my view, the explanation for the delay in bringing the motion is sufficient, and the plaintiff has failed to establish any prejudice.
Conclusion
[56] The court must consider the totality of the circumstances to determine whether it would be just to issue the order for security for costs. The court must also consider the impact of the order on the plaintiff. There is no evidence that if such an order is made the plaintiff would be prohibited from pursuing the litigation.
[57] The court has found that the defendant has met his onus in relation to the first step in the inquiry pursuant to r. 56.01. The plaintiff, however, has failed to meet his onus, or to satisfy the court that it would be unjust to make an order for security for costs.
Order
[58] For the reasons outlined above, the court will make the following orders:
i) An order for security for costs will be made pursuant to r. 56.01(1)(a);
ii) An order that the security will be posted to cover the defendant’s costs and disbursements to date, and the costs anticipated up until trial, without prejudice to seek further anticipated trial costs pursuant to r. 56.07;
iii) An order that $15,000 be posted for security for costs pursuant to r. 56.04;
iv) An order that the security be posted either by payment to the Accountant of the Superior Court of Justice of Ontario to the credit of the action and in favour of the defendant or in the alternative that the security be paid to the plaintiff’s counsel’s law firm to be held in trust pending the outcome of the action and not to be released until and unless there is a further court order with respect to the said security;
v) an order pursuant to r. 56.05 that the plaintiff is prohibited from taking any further steps in this proceeding, except an appeal of this order until the security for costs is posted and proof thereof is provided to counsel for the defendant pursuant to r. 56.05.
Costs
[59] If the parties cannot agree on the issue of costs of the Motion, they may make submissions in writing, no longer than five (5) pages in length exclusive of a Bill of Costs. The defendant may provide his submissions within 15 days of the date of this order and the plaintiff may provide his submissions 15 days thereafter. No reply is necessary.
Original Signed by “Justice M.V. Carroccia” Maria V. Carroccia Justice
Released: March 18, 2022