Bluecore Capital Inc. v. Grillone et al.

COURT FILE NO.: CV-20-00643016-0000

DATE: 20220715

SUPERIOR COURT OF JUSTICE - ONTARIO

RE:

BLUECORE CAPITAL INC.

Plaintiff (Respondent)

AND:

SERGIO GRILLONE, GRILLONE LAW FIRM, 1894931 ONTARIO LIMTED, GRILLONE, BEKIARIS LLP, GEORGE BEKIARIS, BEKIARIS LAW FIRM, LISA ROBERTA GATTO, KEVIN SCULLION, KEVIN J. SCULLION PROFESSIONAL CORPORATION carrying on business as SCULLION LAW, TATIANA ARTURAOLA, VARINDER PUREWAL also known as VIC PUREWAL, and PUREWAL LAW

Defendants (Appellants)

AND BETWEEN:

SERGIO GRILLONE and GRILLONE LAW FIRM

Plaintiffs by Counterclaim

AND:

BLUECORE CAPITAL INC., BLUECORE PARTNERS INC., BLUECORE PARTNERS 4 INC., BLUECORE II PARTNERS INC., BLUECORE PARTNERS 3 INC., BLUECORE II CAPITAL INC., SEA SAE ADVISORY SERVICES INC., 94444244 CANADA INC., ANVIPE CAPITAL INC., CANOR FINANCIAL INC., CIVIS LAW LLP, FLAHERTY MCCATHY LLP, KROEKER LAW PROFESSIONAL CORPORATION, PACEM NORTH CANADA INC., TODD J. MCCARTHY PROFESSIONAL CORPORATION, TODD J. MCCARTHY, JEFFREY KROEKER, TRUE BLUE CAPITAL INC., TULLIO A. D’ANGELA PROFESSIONAL CORPORATION, TULLIO A. D’ANGELA

Defendants by Counterclaim

BEFORE: VELLA J.

COUNSEL: Aaron Rosenberg and David Elmaleh, for the Plaintiff (Respondent)

Sergio Grillone, (representing himself and Grillone Law Firm), for these Defendants (Appellants)

HEARD IN WRITING: July 12, 2022

ENDORSEMENT

[1] Mr. Grillone is a lawyer acting for himself and his law firm, Grillone Law Firm.

[2] Mr. Grillone and his law firm are being sued by Bluecore Capital Inc. for a loan advanced by it. As of August 30, 2021 the amount allegedly owing, with accrued interest, is $2,300,000.00.

[3] Mr. Grillone does not dispute owing monies to Bluecore, but has counterclaimed against it, its directors and other parties claiming $20,000,000.00 in damages. Mr. Grillone has launched and/or been named as a defendant in many lawsuits concerning alleged loan defaults (see para. 7 of the Robson Affidavit, filed).

[4] Mr. Grillone brought a motion for security for costs against Bluecore. He also purported to bring it on behalf of his co-defendants without their consent. The co-defendants took no position on the motion.

[5] The motion was held before Associate Justice Frank. His Honour dismissed the motion with costs against Mr. Grillone. Frank A.J. released his reasons on December 2, 2021.

[6] Mr. Grillone appeals Frank A.J.’s decision.

[7] The appeal raises the following issues:

(a) Did the Associate Justice err in law when His Honour determined that Mr. Grillone was not entitled to a security for costs order without first determining if one of the factors listed in r. 56.01(1) had been satisfied?

(b) Did the Associate Justice err in law by excluding Mr. Grillone’s late served reply affidavit?

(c) Are the Associate Justice’s reasons inadequate?

[8] The answer to each of these questions is no for the reasons that follow. Accordingly, the appeal is dismissed.

Road Map for Analysis

[9] In order to determine the issues, I must first identify the standard of review. Next, I will examine the legal test applied by Frank A.J. and whether the Associate Justice applied the correct legal principles governing the exercise of his discretion under r. 56.01without deciding whether Bluecore met any of the pre-requisite factors listed in r. 56.01(1)(a)-(f) in the first place. Second, and related to the determination of Issue 1, I will also examine whether Frank A.J. applied the correct legal principles in excluding the late filed reply affidavit of Mr. Grillone. Third, I will examine whether or not the Associate Justice’s reasons are sufficiently detailed to meet the minimum requirements.

Standard of Review

[10] A security for costs order is interlocutory and discretionary. A discretionary decision is entitled to deference, absent an error of law or principle (Health Genetic Center Corp. v. New Scientist Magazine, 2019 ONCA 968, 59 C.P.C. (8th) 15). Relevant to the present appeal, the court will not interfere with a security for costs decision where it is based on correct legal principles and the findings of fact are reasonably supported by the evidentiary record (Brewer v. Canada Corporation No. 343827-9, 2021 ONSC 5428, at para. 14).

[11] The standard of appellate review with respect to

(a) a question of law is one of correctness,

(b) a misapprehension of the evidence is one of a palpable and overriding error, and

(c) a question of mixed law and fact is reviewable on a standard of palpable and overriding error unless there is an extricable error of law. (Rebello v. Del Property Management, 2021 ONSC 7888, para. 2; Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 SCR 235)

[12] The errors alleged by Mr. Grillone relate to an extricable question of law. The errors of law are therefore subject to a review under the standard of correctness.

Issue 1: Did the Associate Justice Apply the Incorrect Legal Principles in Assessing Mr. Grillone’s Motion for Security for Costs?

[13] In a nutshell, Mr. Grillone’s argument is that Frank A.J. bypassed the first part of the well-established two-part test under r. 56.01. Mr. Grillone submits that in order to get to the discretionary part of this test, His Honour had to determine whether any of the factors under r. 56.01(1)(a) – (f) were satisfied giving rise to a presumptive basis to order security for costs. If so, then the onus shifts to the responding party to rebut the factor. Then, and only then, can the Associate Justice enter into the exercise of discretion analysis.

[14] Mr. Grillone submits that Frank A.J. did not make a ruling under r. 56.01(1)(a) – (f) and that precluded His Honour from considering whether it was just to order security for costs against Bluecore in exercise of His Honour’s discretion.

[15] I disagree. While it was open to the Associate Justice to determine whether or not Mr. Grillone met the prerequisite of establishing the fulfilment of one or more of the factors set out in r. 56.01, it was also open for His Honour to immediately embark on the question of whether or not Mr. Grillone established that he was entitled to be a beneficiary of the requested security for costs order as a constituent element of what the overall justice of this matter required. This was effectively a threshold issue that fell within the exercise of the Associate Justice’s discretion and was an appropriate factor in considering whether the court ought to issue a security for costs order in favour of Mr. Grillone and his law firm.

[16] The Court of Appeal, in Yaiguaje v. Chevron Corporation, 2017 ONCA 827, 138 O.R. (3d) 1 at para. 19, emphasized that in a security for costs motion the “overriding consideration is whether such an order would be just”. In Chevron, at para. 25, the court stated that the “correct approach is for the court to consider the justness of the order holistically, examining all of the circumstances of the case and guided by the overriding interest of justice to determine whether it is just that the order be made”.

[17] A review of the Reasons, at paras. 11-13, shows that the Associate Justice identified this overarching issue relating to Mr. Grillone and applied the correct legal test, citing 7868073 Ontario Ltd. v. 1841978 Ontario Inc., 2017 ONSC 92, citing, in turn, Fong v. Chan (1999), 1999 CanLII 2052 (ON CA), 46 O.R. (3d) 330 (C.A.). The Associate Justice also found it noteworthy that no other defendant was seeking a security for costs order against Bluecore.

[18] As demonstrated by the Reasons, Frank A.J. undertook a legal analysis of the circumstances under which a self-represented litigant can claim legal costs in the first place in order to determine this issue. His Honour correctly stated the legal test: has the self-represented litigant tendered evidence of actual costs (meaning that he spent time and effort doing work that would ordinarily be done by a lawyer) or a loss of opportunity cost. The latter concept reflects the situation in which a lawyer who is self-represented, like Mr. Grillone, has foregone (and/or likely will in the future) paying legal work in order to devote that time and skill to their defence. The Associate Justice applied the correct legal test.

[19] The Associate Justice found that Mr. Grillone had not adduced any evidence to support a claim for past and/or future estimated legal costs by way of either actual costs or loss of opportunity costs. This raises Mr. Grillone’s complaint that the Associate Justice erred in refusing to admit his late filed reply affidavit. His Honour did not commit an error of law in assessing whether a security for costs order in favour of Mr. Grillone was warranted.

Issue 2: Did the Associate Justice Err in Law in Excluding Mr. Grillone’s Late Served Reply Affidavit?

[20] Mr. Grillone submits that his late reply affidavit, dated November 23, 2021 which was after the completion of all of the cross examinations and delivery of Bluecore’s factum, should have been admitted because the Associate Justice admitted Bluecore’s second supplementary motion record (dated November 11, 2021) which was also delivered after the completion of the cross examinations. However, Mr. Grillone misunderstands the reason for this apparent discrepant treatment.

[21] As reflected in Frank A.J.’s Reasons, at paras. 8-9, Mr. Grillone sought to tender a reply affidavit offered to demonstrate that he met the actual cost and/or loss of opportunity test. The Associate Justice found this to be evidence that was available to Mr. Grillone prior to the cross examinations having been conducted. Mr. Grillone did not seek leave of the court, nor the consent of Bluecore. By tendering the affidavit three days before the return of the hearing, and after the cross examinations were completed and the facta delivered, Mr. Grillone deprived Bluecore of the opportunity to cross examine in a timely manner. There was real prejudice to Bluecore.

[22] On the other hand, the so called “late” second supplementary responding motion record of Bluecore only contained the transcripts of the cross examinations and answers to undertakings. It did not contain any new affidavits. It was properly admitted.

[23] Frank A.J. applied the proper legal principles, under r. 39.02(2) in deciding to exclude the late served reply affidavit of Mr. Grillone. As stated, the cross examinations had been completed and Bluecore had already delivered its factum (as had Mr. Grillone). It is uncontested that this evidence was available to Mr. Grillone prior to the conduct of the cross examinations, and prejudice occurred as Bluecore was deprived of conducting a timely cross examination..

[24] Furthermore, there is evidence in the record to further support Frank A.J.’s conclusion that Mr. Grillone could not satisfy the loss of opportunity cost element of this test. Mr. Grillone has given an undertaking to the Law Society of Ontario not to practice as a lawyer. Therefore, he cannot claim to be devoting time and effort to the defence of this matter that he would otherwise be devoting to fee paying work as a lawyer.

[25] In addition, under cross examination Mr. Grillone admitted that the reason why he brought this motion in the first place was because he felt guilty that the co-defendants had been brought into this lawsuit because of him and that he owed it to them to bring this motion. He admitted that “[i]f it was just me, I wouldn’t be bringing this motion”.

[26] The Associate Justice, at para. 8 of the Reasons, noted that in any event, the proposed evidence reflected in the supplementary affidavit was speculative, reflecting an intention to retain a lawyer in the future, and basing his estimate of likely future costs on a fee estimate given to his spouse who is also a co-defendant.

[27] The Associate Justice applied the correct legal test under r. 39.02(2).

Issue 3: Adequacy of the Associate Justice’s Reasons

[28] Mr. Grillone also challenges the sufficiency of the Reasons. However, the Associate Justice provides adequate reasons when they are read as a whole explaining the basis of the decision and why Mr. Grillone lost (Callegja v. Ahmadi, 2022 ONCA 106, at para. 3). Paragraph 5 states clearly that the basis upon which the motion was dismissed was “on the straightforward basis that Mr. Gillone [sic] has presented no evidence demonstrating an entitlement to costs as a self-represented litigant and there was no basis for the Court to make an order for security for costs in favour of any of the other Defendants who have not brought their own motion for security for costs”.

[29] Mr. Grillone has not demonstrated an error of law, an exercise of discretion on wrong principles or a misapprehension of the facts leading to a palpable and overriding error affecting the order appealed from. Accordingly, the appeal is dismissed.

Costs

[30] If the parties are unable to agree on costs, Bluecore shall deliver its written submissions within 10 days from the release of this decision. I already have Bluecore’s Bill of Costs. Mr. Grillone shall then have 10 days thereafter to provide his written responding submissions. The written submissions shall not exceed three double spaced typed pages from each party.

Justice S. Vella

Date: July 15, 2022