Court File and Parties

COURT FILE NO.: CV-19-95 DATE: 2022/03/29 SUPERIOR COURT OF JUSTICE – ONTARIO (Proceeding commenced at Lindsay, Ontario)

RE: TASH BENSON GROUP INC. Plaintiff

-and-

BACK-BONE GEAR INC., XYZ RGB INC., and HELMUT KUNGL Defendants

BEFORE: Madam Justice S. Corthorn

COUNSEL: James P. McGlone, self-represented No one appearing for the plaintiff corporation Anna Katyk, for the defendants

HEARD: March 24, 2022 (By Videoconference)

Endorsement

Introduction

[1] In this action, the plaintiff corporation (“Tash Benson”) claims damages in excess of $300,000 based, in part, on an alleged breach of an agreement for services between Tash Benson and the defendant corporation, Back-Bone Gear Inc. The history of this action is set out in the court’s previous endorsement, Tash Benson Group Inc. v. Back-Bone Gear Inc., et al., 2021 ONSC 7667 (“the Endorsement”), at paras. 1-8.

[2] For the second time, James P. McGlone, a non-lawyer, is before the court seeking leave to represent Tash Benson. For the reasons set out in the Endorsement, Mr. McGlone’s first motion for the same relief was dismissed. Mr. McGlone was granted leave to bring this second motion on a further and better record: the Endorsement, at para. 61, item 2.

[3] On the first motion, the court had concerns about Mr. McGlone’s ability to fulfill the requirements of a litigant. Those concerns were not sufficient to disqualify Mr. McGlone from representing Tash Benson: the Endorsement, at para. 42.

[4] Also on the first motion, the court recognized that the involvement of self-represented parties can result in increased costs for opposing parties. Mr. McGlone’s conduct to that point in the litigation did not support a finding that it would be unfair to the defendants to permit him to represent Tash Benson in the action: the Endorsement, at paras. 43-49.

[5] Mr. McGlone’s first motion was dismissed because of the lack of evidence as to each of Tash Benson’s corporate structure, Tash Benson’s financial circumstances, and Mr. McGlone’s financial circumstances in his capacity as the sole director of Tash Benson: the Endorsement, at paras. 50-60.

[6] The motion record delivered in support of this second motion includes an affidavit sworn by Mr. McGlone (“the McGlone Affidavit”) and Tash Benson’s affidavit of documents. The defendants did not deliver any responding materials.

The Issue

[7] The sole issue is whether Mr. McGlone has met the onus he bears to satisfy the court that he is entitled to leave to represent Tash Benson in this action.

The Positions of the Parties

[8] Mr. McGlone submits that he is in the best position possible of anyone to advance Tash Benson’s claims. He submits that he has the requisite knowledge of the facts and documents in support of the claims made.

[9] Mr. McGlone also submits that neither he nor Tash Benson has the financial resources to pay for a lawyer. He submits that both he and Tash Benson are in a precarious financial state – specifically because of the conduct of one or more of the defendants. Mr. McGlone submits that the defendants should not be entitled to benefit from their conduct; the defendants will be able to do so if he is not granted leave to represent Tash Benson in the action.

[10] The defendants take no position on the motion. Their counsel attended on the return of the motion solely for the purpose of addressing the issue of costs of the first and second motions.

Analysis

[11] The law with respect to the factors to be considered when an individual who is not a lawyer requests leave of the court to represent a corporation is reviewed at paras. 26-33 of the Endorsement. For the purpose of this second motion by Mr. McGlone, the court relies on the law as set out in that review.

[12] The shortcomings in the evidence presented by Mr. McGlone in support of his first motion related to each of Tash Benson’s corporate structure, Tash Benson’s financial circumstances, and Mr. McGlone’s financial circumstances in his capacity as the sole director of Tash Benson. Based on the evidence now before the court, the court makes the following findings:

• Mr. McGlone is the sole director of Tash Benson;
• As the sole director, Mr. McGlone is authorized by the board of directors to represent Tash Benson;
• The shareholders of Tash Benson are Mr. McGlone’s son, daughter, and sister. The shareholders are aware of the litigation. The protection of their respective interests is not a basis upon which to decline to grant leave to Mr. McGlone to represent Tash Benson in this action;
• Tash Benson is not in a position to pay for a lawyer; and
• Mr. McGlone is not in a position to loan Tash Benson funds to pay for a lawyer.

[13] Based on the findings made on the first motion with respect to (a) Mr. McGlone’s ability to fulfill the requirements of a litigant and (b) Mr. McGlone’s representation of Tash Benson not being unfair to the defendants, and the findings made in paragraph 12, above, I find that Mr. McGlone has met the onus he bears on this motion. Mr. McGlone is granted leave to represent Tash Benson in this action.

[14] It is important that Mr. McGlone understands that he has not yet demonstrated that he has made “the necessary adjustments and [is able] to conform to the requirements for litigation documents”: the Endorsement, at para. 14. Nor has he demonstrated that “he is not confused about what will be required of him”: the Endorsement, at para. 24. Last, Mr. McGlone has not demonstrated that he has, as he previously stated that he would do so, learned the Rules and developed the ability to conform to expectations and practices with respect to litigation documents: the Endorsement, at para. 24.

[15] For example, at para. 55 of the Endorsement, the court provided Mr. McGlone with very specific direction as to the affidavit evidence required, the attachment of documents as exhibits to an affidavit, and the types of documents that the court expected would be included as exhibits to Mr. McGlone’s affidavit in support of this second motion. Despite that very specific direction, the McGlone Affidavit does not include any exhibits.

[16] Instead, Mr. McGlone attempted to place documentary evidence before the court by including in the record a copy of the Tash Benson affidavit of documents and copies of the Schedule ‘A’ documents listed therein. In the substantive text of the McGlone Affidavit, reference is made to some of the Schedule ‘A’ documents.

[17] The inclusion, in that manner, of copies of Schedule ‘A’ documents in the record does not make them evidence before this court. For copies of those documents to be evidence before this court, they must be attached as exhibits to an affidavit, be addressed in the substantive text of the affidavit, and otherwise be admissible based on evidentiary principles.

[18] The evidence upon which Mr. McGlone relies does not comply with the requirements of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 with respect to the affidavit evidence and exhibits. That lack of compliance is perplexing given the specific direction provided to Mr. McGlone in para. 55 of the Endorsement.

[19] The court notes that Mr. McGlone’s signatures on the McGlone Affidavit and on the Tash Benson affidavit of documents were commissioned by a lawyer. Mr. McGlone could have sought guidance from that lawyer to ensure that the evidence placed before the court complied with the Rules of Civil Procedure and with para. 55 of the Endorsement. If Mr. McGlone sought that guidance, it is not apparent from the record that he did so.

[20] Mr. McGlone continues to demonstrate a lack of familiarity with the Rules by including in the motion record a copy of the defendant’s factum dated December 2019. There is nothing in the Rules that would suggest to a litigant that it is appropriate to include such a document in a motion record.

[21] The shortcomings addressed in the Endorsement and in this endorsement are not sufficient to cause the court to dismiss Mr. McGlone’s second request for leave to represent Tash Benson.

[22] In response to Mr. McGlone’s first motion, the defendants raised the issue of potential unfairness to them by virtue of increased costs they may incur with Mr. McGlone representing Tash Benson. Mr. McGlone’s shortcomings as a litigant – and the potential increased costs they face as a result of Tash Benson being represented by a non-lawyer – likely remain of concern to the defendants.

[23] Mr. McGlone must understand that it is incumbent upon him to familiarize himself with the Rules of Civil Procedure and to comply with court orders. Failure on his part to do one or both of those things may result in adverse costs consequences to him and/or to Tash Benson with respect to interim steps in the proceeding and in relation to the action as a whole.

Disposition

[24] The court makes the following order:

1. James P. McGlone is granted leave to represent Tash Benson Group Inc. for the purpose of this action.

Costs

[25] At para. 63 of the Endorsement, the court stated that if Mr. McGlone pursued this motion, it would address costs of both motions at the same time. At the conclusion of the hearing of the second motion, the court heard submissions with respect to costs of the motions.

[26] The defendants request their costs of the first motion on a full indemnity basis and payable forthwith. They ask the court to order no costs of the second motion.

[27] In support of their request for costs on a full indemnity basis, the defendants submit that it was incumbent upon Mr. McGlone to seek leave to represent the corporation prior to serving the statement of claim on the defendants. The defendants submit that had Mr. McGlone proceeded in that manner, they would not have incurred any costs to address the issue of representation of the plaintiff corporation in this action.

[28] The defendants also submit that solely as a result of Mr. McGlone’s conduct, including his failure to follow the Rules of Civil Procedure, the first motion, which was scheduled to be a one-hour motion, turned into a three-hour event (i.e., with Mr. McGlone giving evidence). As a result, the defendants incurred costs at an elevated level on Mr. McGlone’s first motion. The defendants submit that absent the potential to recoup some of their legal costs on a step-by-step basis, including for Mr. McGlone’s first motion, they will be unable to afford legal representation for the duration of the action.

[29] Mr. McGlone submits that he and Tash Benson are both unable to pay costs either forthwith or over a specified time frame. He asks the court to consider that an award of costs, if payable at this time, will effectively bring the litigation to a halt – because neither he nor Tash Benson is in a position to pay costs.

[30] I find that the defendants are entitled to their costs of the first motion. They are not, however, entitled to those costs on the full indemnity scale. That scale is reserved to address conduct of the most egregious kind. Mr. McGlone’s conduct on the first motion does not rise to that level.

[31] An award of costs on the substantial indemnity scale is typically made against a litigant who has behaved in an abusive manner, brought proceedings wholly devoid of merit, or unnecessarily run up the costs of litigation. On the return of Mr. McGlone’s first motion, the court concluded that a cost-effective means by which to deal with the lack of evidence in support of the motion was to permit Mr. McGlone to give viva voce evidence. Had Mr. McGlone not been permitted to do so, it would have been necessary to adjourn the motion, permit Mr. McGlone to file an affidavit, and have the parties return for the continuation of the motion.

[32] Mr. McGlone’s approach to the first motion resulted in less efficiency than might have otherwise been expected. That approach does not, however, rise to the level of one which unnecessarily ran up the costs of the motion to the point that the defendants are entitled to their costs of the first motion on a substantial indemnity basis.

[33] The defendants are entitled to their costs of the first motion on a partial indemnity basis. I have reviewed the costs outline submitted by the defendants. The partial indemnity costs claimed by the defendants are $5,437.56. Having considered the factors set out in r. 57.01, I find that a reasonable quantum for costs on the partial indemnity scale is $4,000.00 inclusive of fees, disbursements, and HST.

[34] Given the nature of the litigation and the allegations made by Mr. McGlone, as to why he and Tash Benson are each in a precarious financial position, it would be unfair to Mr. McGlone to require him and/or Tash Benson to pay the defendants’ costs of the first motion either forthwith or by a stated deadline. Mr. McGlone and Tash Benson are jointly and severally liable for the defendants’ costs in the amount of $4,000.00. Said costs are payable in any event of the cause, shall not be payable pending judgment at trial, and shall be payable within 90 days of the date of the judgment at trial.

[35] There shall be no costs of the second motion. Mr. McGlone’s litigation conduct to date has not resulted in his motion being dismissed a second time or in an award of costs against him at an elevated level for the first motion. Mr. McGlone’s litigation conduct to date, including as described in this endorsement and in the Endorsement, is sufficient, however, to support a conclusion that he is not entitled to his costs of this motion.

[36] In summary, the court makes the following orders with respect to costs:

1. James P. McGlone and Tash Benson are jointly and severally liable to the defendants for their costs of the motion heard in October 2021 and shall pay to the defendants, their costs of that motion on the partial indemnity scale in the amount of $4,000.00 inclusive of fees, disbursements, and HST.
2. The costs outlined in paragraph 1, above, shall be payable in any event of the cause, shall not be payable pending judgment at trial, and shall be paid within 90 days of the judgment at trial unless otherwise ordered by the court.
3. There shall be no costs of the motion heard on March 24, 2022.

Madam Justice S. Corthorn Date: March 29, 2022