Court File and Parties

COURT FILE NO.: CV-14-00512772-00A1 MOTION HEARD: 20220315 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: RAJAN KAUSHAL, Plaintiff AND: MOHAMMAD SOBHI, Defendant AND: TORONTO HOMES AND BUILDING REALTY INC., Third Party

BEFORE: Associate Justice R. Frank

COUNSEL: C. Tucker for the Moving Party / Third Party A Kamyab for the Responding Party / Plaintiff

HEARD: March 15, 2022

Reasons for Decision

A. Introduction

[1] This is a motion by the third party, Toronto Home and Building Realty Inc. (the “Third Party”), for an order dismissing the third party claim due the failure of the Defendant, Mohammad Sobhi (the “Defendant”), to comply with the order of Associate Justice Jolley made on December 3, 2021 pursuant to which the Defendant was required to: (i) pay into court $60,000 as security for costs of this action; and (ii) pay to the Third Party costs of the security for costs motion in the amount of $7,300.

[2] For the reasons that follow, the motion is granted.

B. Background Facts

[3] The Statement of Claim was issued on September 24, 2014 alleging that the Defendant failed to close an agreement of purchase and sale (the “APS”) for a residential property (the “Property”). The plaintiff seeks specific performance and obtained a certificate of pending litigation with respect to the Property. Alternatively, the plaintiff claims damages in the amount of $5,000,000.

[4] The Defendant defended the Statement of Claim on August 7, 2015. The Defendant’s defence pleads, among other things, that the APS is null and void due to the improper waiver of the conditions in the APS, and the failure of the Defendant to obtain his spouse’s consent to the sale of the Property, which was allegedly a matrimonial home.

[5] The Defendant issued the third party claim on February 3, 2016. In the third party claim, the Defendant seeks contribution and indemnity from the Third Party. The Defendant alleges, among other things that the Third Party acted as a representative for both the plaintiff and the Defendant under an APS for the Property, and that the Third Party breached its duties to the Defendant with respect the APS and a related listing agreement. The Third Party defended the third party claim on March 18, 2016.

[6] The trial for the main action and third party claim was scheduled for April 8, 2019. All parties attended on April 8, 2019. The trial was unable to be heard on April 8, 2019, as the Defendant’s lawyer brought a motion on the morning of April 8, 2019 requesting he be removed from the record.

[7] Justice Sanderson granted the Defendant’s lawyer’s motion, finding that his lawyer “could not reasonably rely on the instructions Mr. Sobhi was giving to him”. On August 9, 2019, Justice Sanderson ordered costs thrown away for the Third Party of $5,500.00 plus HST for a total of $6,215, payable forthwith by the Defendant (the “2019 Costs Order”), and costs thrown away for the Plaintiff of $16,500.00 plus HST, payable forthwith by the Defendant.

[8] Following two further pre-trials, the trial was scheduled for early April 2021. It was adjourned by Myers J. at the request of the plaintiff and the Third Party to permit a trial in person and to permit the Third Party to bring a motion for security for costs.

[9] The Third Party brought a motion for security for costs that was heard on December 1, 2021. Associate Justice Jolley concluded that this was an appropriate case for an order for security for costs and ordered the Defendant to pay $60,000.00 into court by January 31, 2022 (the “Security for Costs Order”). In reaching that conclusion, one of Associate Justice Jolley’s findings was that she was not satisfied the Defendant had demonstrated a high chance of success at trial. Associate Justice Jolley also ordered that the Defendant pay the 2019 Costs Order by January 14, 2022 and ordered the Defendant to pay to the Third Party costs of the security for costs motion fixed in the amount of $7,300 (all inclusive) and payable within 30 days (the “2021 Costs Order”). Associate Justice Jolley’s order also provided that if the Defendants did not pay the $60,000.00 into court by January 31, 2022, the Third Party would be at liberty to move for an order dismissing the third party claim with costs payable on a substantial indemnity basis.

[10] The Defendant has not paid any money into court as required by the Security for Costs Order, nor has he paid the 2021 Costs Order in the amount of $7,300.

[11] At the time of service of the motion record for this motion to dismiss, the 2019 Costs Order was unpaid. Shortly after service of the motion record, the Defendant made a partial payment of $5,500 toward the 2019 Costs Order, leaving the HST portion of $715 unpaid.

C. Preliminary Issues

(1) Defendant’s request for an adjournment of this motion

[12] The notice of motion for this motion, returnable on March 15, 2022, was served on the Defendant by regular mail and email on January 5, 2022. The Defendant did not serve any responding material prior to the filing of the motion confirmation form by the Third Party.

[13] On Friday, March 11, 2022, the Defendant retained counsel who then contacted counsel for the Third Party and sought the consent of the Third Party to an adjournment of this motion. The Third Party did not consent to the requested adjournment.

[14] On Monday, March 14, 2022, the Defendant served a responding motion record on the Third Party. The responding motion record was served after 4:00pm.

[15] The responding motion record contains an affidavit sworn by the legal assistant of the Defendant’s new lawyer of record (the “March 14 Affidavit”). The affidavit indicates that it was sworn on March 11, 2022, but counsel for the Defendant advised that although preparation began on March 11, the affidavit was not sworn until March 14, 2022. As a result, there is an error in the date of the affidavit, which should be March 14, 2022 rather than March 11, 2022.

[16] I pause to note that there is no explanation as to why the Defendant did not swear the affidavit himself, and why a legal assistant is the affiant of the March 14 Affidavit. Further, although the affiant makes a general statement at the outset of her affidavit that where she has been informed of facts by others, she has stated the source of such facts, she does not properly identify the source of various statements in the affidavit that are clearly not within her direct knowledge. As well, if the source of her knowledge comes from documents in the file, the affiant does not identify those documents. I appreciate that the Defendant may have difficulty with English and require a translator, and that this would have made it more difficult for the Defendant to be the affiant in circumstances where there was a limited amount of time to prepare the affidavit. However, this is not explained in the March 14 Affidavit. Nor is there an explanation of why the Defendant’s son, as opposed to the Defendant’s lawyer’s legal assistant, was not the affiant or identified as a source of the information in the affidavit (if in fact he was the source of any of it). In this regard, I note that it appears from the record that the Defendant’s son was present and made submissions at other hearings in this action, including an April 23, 2021 case conference before Myers J. and the December 1, 2021 motion for security for costs before Associate Justice Jolley. He was also present on this motion (by Zoom) as an observer.

[17] In any event, at the outset of the motion, the Defendant (i) sought leave for the late filing of the responding motion record (that includes the March 14 Affidavit), and (ii) requested an adjournment of the motion. Notwithstanding the extremely short service of the responding motion record, the Third Party did not object to its late filing, but it maintained its opposition to the adjournment request.

[18] The Defendant submitted that the adjournment should be granted in the interests of justice. The Defendant argued that, given the nature of the motion, a short adjournment should be granted to allow him to prepare a response to the motion. The Defendant submitted that an adjournment was required because counsel was only retained on Friday, March 11, 2022, at which time he was apprised that this motion was pending. The Defendant submitted that the file is voluminous and some time is required for new counsel to review it. The Defendant also submitted that the court should consider that the Defendant is a 72-year-old pensioner who has been in Iran for the past 4 months, with limited access to email. I pause to note that there is no evidence to support the factual assertions regarding the Defendant’s whereabouts, or his access to email.

[19] In response, the Third Party submitted that the request for an adjournment should be denied. The Third Party argued that request for an adjournment is a bald one, as the March 14 Affidavit provides no evidence pertinent to the adjournment request. For example, there is no evidence why the Defendant did not prepare any responding materials in the two months following service of the motion record on him, why no contact was made with the Third Party’s lawyer prior to March 11, 2022, and why counsel was only retained on March 11, just days before the return of the motion.

[20] The Third Party also pointed to the history of last minute requests for adjournments, including the April 2019 adjournment of the trial (that was granted) and a request for an adjournment made to Associate Justice Jolley in the middle of the motion for security for costs (that was denied). The Third Party also pointed to the current pending trial date of April 19, 2022 as well as the June 19, 2019 endorsement of Firestone J. (now Regional Senior Justice Firestone) ordering that the trial date fixed at that time (which was ultimately adjourned due to the pandemic) was peremptory on the Defendant. The Third Party argued that it would be prejudiced by an adjournment of the motion because trial preparation would have to begin in earnest without any security for its costs.

[21] Having considered the parties’ submissions, I denied the adjournment request. Given the pending trial, an adjournment would have been prejudicial to the Third Party. The Defendant had ample notice of the motion. He was served with the motion record in early January 2022 yet did not contact counsel for the Third Party about the motion or indicate any intention to oppose the motion or serve responding material. Leaving aside that the March 14 Affidavit was sworn by a legal assistant rather than the Defendant, the affidavit provides no evidence relevant to the adjournment request. The Defendant – who has been self-represented since April 2019 – provided no explanation why he only retained counsel on March 11, having known for more than two months that the motion was returnable on March 15. In light of all the circumstances, I accept the Third Party’s submission that the adjournment request is a bald one that is unsupported by any evidence that would justify an adjournment.

(2) Should the Defendant be granted leave to file a further responding affidavit while the motion was being heard?

[22] As noted above, at the outset of the motion, the parties made submissions on the Defendant’s request for an adjournment. As there were several other motions before the court, I advised the parties that I would hear and complete those motions first, consider the adjournment request over the lunch break, and that the hearing of this motion would then continue in the afternoon. I advised counsel to be prepared to argue the motion in the event that the request for an adjournment was denied.

[23] When the hearing of the motion resumed at 2:00pm, I advised the parties that the Defendant’s request for an adjournment was denied and that the motion would proceed.

[24] Counsel for the Defendant then sought leave to file a further responding affidavit in opposition to the motion. The new affidavit was sworn on March 15, 2022 (the “March 15 Affidavit”). Once again, the affidavit was sworn by the Defendant’s legal assistant rather than the Defendant or anyone with more direct knowledge of the history of the action and the Defendant’s activities with respect to the action. Counsel for the Defendant advised that the March 15 Affidavit had been provided to counsel for the Defendant approximately 30 minutes before the 2:00pm resumption of the hearing of the motion.

[25] Counsel for the Defendant submitted that the affidavit should be admitted into evidence, He argued that its content was imperative for the argument and adjudication of the motion. He submitted that there was no need for the Third Party to respond to the content of the affidavit because it simply states facts known to the parties or facts with respect to which the court could take judicial notice. Counsel for the Defendant also argued that the affidavit is more probative than prejudicial and that the affidavit should be admitted in view of the relief sought on the motion, which would have severe consequences for the Defendant.

[26] In response, counsel for the Third Party took the position that the March 15 Affidavit should not be admitted because doing so would be prejudicial to the Third Party. First, it was only served in the middle of the motion, such that counsel for the Third Party only had an extremely short period of time to review it (i.e. he did so during a brief recess). Further, the timing of service was such that counsel was not able to review the affidavit adequately or consult with the Third Party about its contents. As well, based on a brief review of the contents of the March 15 Affidavit, counsel submitted that there does not appear to be anything in it that was not available when the March 14 Affidavit was sworn. That includes the report with respect to the value of the Property attached as Exhibit “C” to the affidavit. Although it appears on the face of that exhibit that the report was created on March 15, 2022 (i.e. the same day as the hearing), there is no explanation or apparent reason why it could not have been created earlier and included in the March 14 Affidavit. For those reasons, counsel for the Third Party submitted that leave should not be granted to file March 15 Affidavit.

[27] Leaving aside that the March 15 Affidavit was sworn by the Defendant’s lawyer’s legal assistant, I find that there is no proper basis for its late filing in the middle of the hearing of the motion. I accept the submissions of the Third Party that the Defendant has failed to demonstrate that the affidavit contains any information that was not available when the March 14 Affidavit was served (which was, itself, served extremely late and with virtually no notice to the Third Party). I also accept the Third Party’s submission that it was served with insufficient time for the Third Party and its counsel to properly review its contents, consult and respond, if necessary. I find that admitting the supplementary responding affidavit would be prejudicial to the Third Party, and I deny leave to file it.

[28] Nevertheless, I heard submissions by both parties based on the content of the March 15 Affidavit. For the reasons outlined below, the evidence in the March 15 Affidavit would not alter the result of this motion even if I were to have granted leave to permit its late filing.

D. Motion for Dismissal of the Third Party Claim

(1) Submissions of the parties

[29] The Third Party submits that the Defendant is admittedly in breach of the Security for Costs Order and the 2021 Costs Order. The Third Party argues that there is no evidence of any compelling reason for the court to exercise its discretion to grant an indulgence to the Defendant.

[30] With respect to the March 14 Affidavit, the Third Party submits that: (i) it contains no evidence of any efforts by the Defendant to secure funds to the satisfy the Security for Costs Order or the 2021 Costs Order; and (ii) it demonstrates that the Defendant does not intend to cure his defaults and comply with those orders. Rather, the evidence in that affidavit demonstrates that the Defendant is seeking an indulgence that would allow him to bring a motion seeking an order to lift the certificate of pending litigation obtained by the Plaintiff in the main action (the “CPL”). The apparent purpose of lifting the CPL is to make the Defendant’s equity in the Property available to satisfy any costs that may become payable to the Third Party after the trial.

[31] The Third Party submits that rather than proposing a means of complying with the existing orders against the Defendant, the Defendant’s evidence demonstrates that he is seeking to avoid them. The Third Party argues that the Defendant is seeking relief that would effectively remove the protection that has been put in place by this court through the Security for Costs Order.

[32] The Third Party also argues that there is no evidence of any change in circumstance from when the Security for Costs Order was made that would justify the Defendant’s intended course of action. This is particularly the case given the prejudice that would result because of the pending trial that is scheduled to commence on April 19, 2022, which would require counsel for the Third Party to begin trial preparations immediately but without the protection of the Security for Costs Order.

[33] The Third Party also argues that even if March 15 Affidavit were admitted, it does not assist the Defendant. The Third Party submits that the contents of the March 15 Affidavit are beside the point of this motion because they fail to address any steps taken by the Defendant to comply with the Security for Costs Order that was made on December 3, 2021. The Third Party argues that Exhibits “A” and “B” of the March 15 Affidavit have no bearing on the Defendant’s breaches of the Security for Costs Order because they relate to events in 2019 and, therefore, are not a reliable indication of what the Defendant is capable of doing now to secure funding. With respect to Exhibit “C” to the March 15 Affidavit, the Third Party argues that, even if it was proper evidence that there may be equity in the Property if the CPL is removed from title, it is too speculative to assume that the Defendant would succeed on a motion to vacate the CPL.

[34] In response, the Defendant submits that the third party claim should be allowed to continue so that it can be heard and determined on its merits. He submits that it would be contrary to the interests of justice to dismiss the third party claim for failure to comply with the Security Costs Order. In support of his position, the Defendant argues that the Third Party will be protected with respect to any costs award that may be made in its favour through the Defendant’s equity in the Property. In this regard, both the March 14 Affidavit and March 15 Affidavit contain the following statement (by the Defendant’s lawyer’s legal assistant): “Should [the] relief to vacate the CPL be granted, the Defendant intends to refinance the Property in order to pay all outstanding costs orders”.

[35] The Defendant also asserts that the CPL is the only impediment to his ability to access the equity in the Property, and he relies on the March 15 Affidavit as evidence of this impediment. Alternatively, he asks the court to take judicial notice of the fact that the CPL would be an impediment to refinancing the Property. To remove that impediment, the Defendant has expressed an intention to bring a motion to lift the CPL and submits that he has taken steps to schedule such a motion and had even hired a lawyer on a limited scope retainer basis to do so. The Defendant submits that he will succeed on that motion because the Plaintiff has admitted in the statement of claim that the Property is not unique.

[36] The Defendant also argues that in determining whether to dismiss the third party claim, the court should take into consideration that he is a pensioner with limited means and whose main asset is in the Property. In this regard, he submits that the funds used for the partial payment of the 2019 Costs Order came from a family member.

(2) Legal background, discussion and analysis

[37] Rule 56.06 provides as follows:

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.

[38] In Bokserman v Macdonald Associates PC, 2021 ONSC 977 [1], Myers J. provided the following summary of the application of Rule 56.06:

In Belende v. Greenspoon, 2008 CarswellOnt 5080 (Ont. S.C.J.), Pollak J. discussed how this rule is approached:

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.]

In Leonard v. Prior, 1994 CarswellOnt 578 (Ont. Gen. Div.), 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.

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.]

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. [2]

(a) Defendant’s alleged lack of funds

[39] On this motion, the onus is on the Defendant to put his best foot forward to persuade the court that it should relieve against a breach of the Security for Costs Order. [3]

[40] As noted above, the Defendant argues that his failures to comply with the Security for Costs Order or pay the 2021 Costs Order are due to his lack of financial resources. He submits that he is a pensioner with limited means and that he had to rely on funding from a family member to make a partial payment of the 2019 Costs Order. However, there is no evidence to support those submissions. Further, given that the onus is on Defendant to provide compelling evidence and put his best foot forward, it is telling what is not disclosed in the responding affidavit evidence.

[41] For example, the Defendant has not provided evidence regarding his current employment status or his own personal income. He has not provided any evidence of money in bank accounts or investments that might be available to satisfy the security for costs. [4] As noted in Associate Justice Jolley’s Reasons for Decision at paragraph 12: “To the extent there was any evidence of Mr. Sobhi’s means on this motion, it came from the transcript of Ms. (sic) 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.” [5] The Defendant has not provided any evidence to suggest that this rental income is no longer available to him to be used to satisfy the Security for Costs Order.

[42] As well, Associate Justice Jolley noted that the Defendant’s son advised the court in December 2021 that the Defendant was in Iran to obtain funds to pay the outstanding costs orders. [6] There is no evidence that effort was unsuccessful.

[43] The only evidence regarding inquiries to lenders for refinancing the Property is a letter from April 2019 attached as an exhibit to the March 15 Affidavit. Even if that affidavit were to be accepted as evidence on this motion (which it is not), the inquiry is nearly three years old. Simply put, the Defendant has not provided any current evidence or any documents from third parties with respect to efforts he has made to obtain funds.

[44] At the conclusion of his submissions, counsel for the Defendant submitted that if the court is prepared to grant a further indulgence, the Defendant’s son will mortgage his own home in order to raise the necessary funds for any adverse costs order. However, there is no evidence at all before the court that the Defendant’s son is prepared or able to do so, or even if he could, when he would be able to do so and what amount he would be able to raise. Further, if that were possible, it begs the question of why the Defendant’s son has not already done so, and it contradicts the Defendant’s argument that he has no means of raising any funds.

(b) Defendant’s argument for removal of the CPL in place of the Security for Costs Order

[45] As noted above, the Defendant submitted that his only means of satisfying the Security for Costs Order or any costs orders is his equity in the Property, which is trapped because of the CPL. The Defendant also argues that if the third party claim is not dismissed, he will bring a motion to vacate the CPL on the Property. He submits that if that relief is granted, he intends to refinance the Property in order to pay all outstanding costs orders. He argues that, in this way, the equity in the Property can satisfy the objective of the Security for Costs Order.

[46] As previously noted, I am unable to find on the evidence that the equity in the Property is the Defendant’s only asset. However, even if there was such evidence, there are a number of reasons why the Defendant’s position would still be untenable.

[47] First, the Defendant’s submission assumes that he will be successful on the motion to lift the CPL because the plaintiff has admitted the Property is not unique. However, it is speculative as to whether the Defendant would be successful on a motion to vacate the CPL and in defending the main action. For example, even accepting the Defendant’s argument that the plaintiff has admitted the Property is not unique, uniqueness is just one of the equitable factors the court will consider on a motion to vacate the CPL.

[48] The Defendant relies on the March 14 Affidavit as evidence that he has taken steps to bring a motion to lift the CPL, including engaging a lawyer on a limited scope retainer basis to schedule such a motion. However, a review of the exhibit he relies on indicates that the motion scheduling request was made in January 2022 for a short motion in a different action The evidence the Defendant relies on does not, on its face, support his contention that he has retained someone to bring a motion in this action to lift the CPL. In any event, there is no evidence that a motion to lift the CPL was ever booked or that any motion materials were ever prepared or served.

[49] A further problem with the Defendant’s proposal to provide “security” through his equity in the Property is that it is a collateral attack on the Security for Costs Order and seeks to circumvent that order. In DeMarco v Nicoletti Estate and Daboll, the Court held as follows:

To determine whether this court should exercise its discretion and permit the relief sought, it is important to examine what the plaintiff is seeking. Essentially, the plaintiff wants to re-visit the security for costs order and/or to circumvent the order entirely after his appeal rights have been exhausted. He has not made any contribution whatsoever towards security for costs and he waited until he was served with the defendant’s motion to strike the action before moving for the relief that he now seeks. [7]

[50] Later in the same decision, the court reiterated the prohibition on revisiting a decision granting a security for costs order:

It is clear that any relief granted under Rule 56.06 is discretionary. The court is not to perform a review of the decision to order that security be paid into court, nor to review the quantum or type of security that was ordered. Instead, the court must confine its focus to the efforts made by the plaintiff to meet the obligations imposed in the order for security for costs. [8]

[51] In my view, it is evident that the Defendant is asking the court to revisit and review Associate Justice Jolley’s decision. The Defendant’s argument that the equity in the Property can satisfy the objective of the Security for Costs Order was already made to Associate Justice Jolley and rejected by her. Paragraph 11 of Associate Justice Jolley’s Reasons for Decision state as follows:

[The Defendant], or rather Thomas [his son], 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 that 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. [9]

[52] I also find that the Defendant’s proposed alternative for “securing” payment of the Third Party’s costs (i.e. to grant him an indulgence so that he may bring a motion to lift the CPL and, if successful, refinance the Property) would be prejudicial to the Third Party. The trial is scheduled to commence on April 19, 2022. Under the Defendant’s scenario, the Third Party would have to start preparing for that trial without the security ordered by this court through the Security for Costs Order. On the other side of the ledger, the Defendant submits that it would be unjust to dismiss his third party claim without an adjudication on the merits. However, the Rules expressly provide that the court may dismiss a proceeding if a party defaults in giving the security for costs that have been ordered. Here, rather than paying the required security into court, the Defendant seeks to revisit the Security for Costs Order. This would be unfair and prejudicial to the Third Party. The following reasoning from DeMarco is apt:

…I find that, in fact, it would not be unjust to dismiss the action in the circumstances of this case, in which the plaintiff has made no effort to pay security for costs and when his financial circumstances have not changed since the granting of the order. On the contrary, the plaintiff has failed to comply with costs orders and security for costs orders previously imposed on him and has essentially asked this court that he be entitled to run this litigation on his own terms. In my view, it would be unfair to permit the action to proceed in these circumstances. [10]

[53] Finally, the Defendant submits that in deciding this motion, the court should take into account that he was self‑represented at the hearing of the security for costs motion. While it is appropriate and necessary to consider the Defendant’s self-represented status, it is also important to recognize that that would have been one of the considerations when the security for costs motion was argued and decided. In this regard, I adopt the following principles outlined by Myers J. in Baradaran v Tarion Corp [11]:

The court is very keen to the increasing prevalence of self-represented litigants appearing before it. Self-represented litigants are entitled to be heard with respect and to be positively assisted by counsel opposite and the judge to ensure that all litigants have a full and fair opportunity to put their cases before the court. Some lament that judges at times appear to bend over backwards to protect self-represented litigants to the point of unfairness to represented parties opposite. It is important to draw a line. All parties, self-represented or not, are entitled to a fair hearing and a fair day in court. Self-represented parties can, at times, require assistance to understand the process and legal rules so as to avail themselves of their entitlement to the fair hearing assured to all litigants. They are entitled to this assistance and both the court and counsel opposite are bound to provide it to ensure a fair hearing. But no party, whether self-represented or not, is entitled to abuse the system or the party opposite.

Treating all litigants with respect and ensuring that all have an opportunity to have a fair hearing does not include excusing abusive conduct such as repeated breaches of court orders. To the contrary, ensuring a fair hearing and a fair process requires the even-handed application of the Rules and the enforcement of court orders for all parties. The Rules are broad enough that their interpretation and enforcement can and should take into account whether a party has legal representation where that issue is relevant to promote a fair hearing in the circumstances. However, once a determination under the Rules results in an order of the court, it is only fair for the orders to be seen as binding and to be enforced with an even hand regardless of parties’ representation. The self-represented party’s status would be taken into account in the hearing that led to the order being made if appropriate. I certainly took into account Mr. Baradaran’s self-represented status in ordering costs of only $750 against him last time. But once orders are made, a failure to enforce orders against self-represented parties is unfair to the parties opposite and undermines respect for the court and the civil justice system. [12]

[54] Although the Court is reluctant to dismiss an action without an adjudication of the merits of the claim, the case law also recognizes that enforcement of interlocutory orders “is of overriding concern for the courts in ensuring the administration of justice and in upholding the integrity of the justice system. Failure to ensure compliance with court orders in the course of litigation is ‘corrosive of the entire justice system.’”. [13] In Rana v. Unifund Assurance Company, Dunphy J. outlined various principles to guide the Court’s discretion when considering whether to dismiss an action for non-compliance with an interlocutory order pursuant to Rule 60.12, including the following:

a. Where there has been non-compliance with an order of the court, the court should be alive to the possibility that its process is being abused; failing to act may deprive the moving party of justice according to law and risks rendering the court a paper tiger;

b. The right of access to the courts must be accompanied by the responsibility to abide by the rules of civil procedure and to comply with orders of the court…;

c. The court ought not to sit in appeal of the prior costs awards — the respondent will have had the opportunity to make submissions about impecuniosity at the prior hearings that resulted in the costs orders and seeking to relieve against prior costs orders constitutes a collateral attack on orders previously made;

g. Self-represented litigants, while entitled to some accommodation and assistance to ensure a fair hearing, are not entitled to abuse the system or the party opposite and failure to enforce orders once made against self-represented parties is unfair to the parties opposite and undermines respect for the court and the civil justice system;

h. “Courts usually talk in terms of prejudice that cannot be compensated for by costs. But, at some point, costs themselves become an inadequate form of compensation for prejudice, especially where the party on whom they are imposed refuses to pay them”. [14]

[55] Dunphy J. also held that it would be unfair to require a party to answer another party’s claims in court when the claimant simply refuses to abide by the orders of that same court. [15]

[56] In summary, having considered all of the circumstance, I find that it would not be unjust to dismiss the third party claim. The Defendant has failed to provide evidence of efforts to satisfy the Security for Costs Order or a credible proposal to rectify his default. Further, the Defendant is seeking to circumvent the Security for Costs Order rather than comply with it, and he is attempting to “run this litigation on his own terms” by replacing the court‑ordered security with his own form of security that is speculative. The purported evidence he relies on does not, on its face, support his contention that he has commenced the process necessary to bring a motion to lift the CPL. In any event, the trial is looming. Given the Defendant’s failure to comply with the Security for Costs Order, the Third Party would be forced to prepare for trial without the protection this court ordered should be in place. The Security for Costs Order should be treated as binding and enforced with an even hand regardless of parties’ representation at the time the order was made. A failure to enforce the Security for Costs Order would be unfair to the Third Party and undermine respect for the court and the civil justice system.

E. Disposition

[57] For the reasons outlined above, the motion is granted and I order that the third party claim is dismissed.

[58] In terms of costs, the Third Party is seeking costs of the motion on a partial indemnity basis in the amount of $4,750 (all inclusive). With respect to the action, the Third Party has prepared a bill of costs that seeks costs with respect to its fees and disbursement and in the amount of $83,161.22 inclusive of disbursements and HST on a partial indemnity basis. In response, the Defendant submits that there should be no costs of the motion and that the costs claimed in the action are excessive.

[59] Having succeeded on the motion, the Third Party is presumptively entitled to its costs and I do not see any reason to depart from the ordinary presumptive entitlement.

[60] The overriding principles in determining costs are fairness and reasonableness. [16] In addition, I am guided by the factors set out in Rule 57.01(1) when awarding costs. Here, I have considered the importance of the motion to the parties, the conduct of the Defendant and the reasonable expectations of the parties. Based on the parties’ submissions and considering all relevant factors set out in Rule 57.01(1), I find that it is fair and reasonable in the circumstances and within the reasonable expectations of the parties that the Defendant pay to the Third Party costs of this motion on a partial indemnity basis fixed in the amount of $4,750 (inclusive of disbursements and HST) and payable within 30 days.

[61] With respect to the costs of this action, I find that the Third Party is entitled to its costs on a partial indemnity basis. However, given the quantum sought and the fact that the Third Party’s Bill of Costs was uploaded to CaseLines during the hearing of the motion, I find that it is appropriate in the circumstances to refer the costs for assessment under Rule 58.

R. Frank Associate J. Date: March 21, 2022