COURT FILE NO.: CV-21-00655217
MOTION HEARD: 2022/05/17
DATE RELEASED: 2022/09/13
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: 1252663 ONTARIO INC. C.O.B. PREMIER CONCRETE CONTRACTORS INC., Plaintiff
AND:
LYNX ENVIRONMENTAL SOLUTIONS INC. et al, Defendants
BEFORE: ASSOCIATE JUSTICE R. FRANK
COUNSEL: Robert Harason for the Defendants/Moving Parties and Responding Parties on the cross-motion
Steven Bookman and Christina Hinds for the Plaintiff/Responding Party and Moving Party on the cross-motion
HEARD: 17 MAY 2022
REASONS FOR DECISION
[1] This is a motion by the Defendants for an order for security for costs of this action on the basis that the Plaintiff is a corporation and there is good reason to believe that it has insufficient assets in Ontario to pay the costs of the Defendants (the “Security for Costs Motion”).
[2] The Defendants also seek an order:
a) striking out the affidavit of Julia Di Savino (“Ms. Di Savino”) sworn November 30, 2021 in response to the motion because she failed to attend for cross-examination; and
b) the inclusion in the reasons for decision on this motion or otherwise of an observation or other statement to the affect that, on the basis of the evidence adduced on this motion, there is no genuine issue requiring a trial on the plaintiff’s claim.
[3] There were a number of preliminary evidentiary and procedural issues that were dealt with at the outset of the hearing, including several that related to a cross-motion by the Plaintiff (the “Cross-motion”). In the Cross-motion, the Plaintiff sought the following relief:
a) an order that certain evidence relied on by the Defendants in support of the Security for Costs Motion be struck out or given no weight; and
b) an Order that any documents provided to the Court with respect to the Plaintiff’s ability to meet a cost award be sealed and not released to the Defendants or the Defendants’ counsel, or, in the alternative, an Order that any documents disclosed by the Plaintiff with respect to its ability to meet a cost award be designated as “for counsel’s eyes only” (the “Sealing Order”). More specifically, the Plaintiff sought the Sealing Order with respect to portions of the affidavit evidence and the exhibits attached to the affidavit of Julia Di Savino, the Plaintiff’s representative, sworn May 9, 2022 (the “Unredacted May 9, 2022 Di Savino Affidavit”) that the Plaintiff relies on in opposition to the Defendants’ Security for Costs Motion.
[4] As set out below, I ruled on certain preliminary issues at the May 17, 2022 hearing of the Security for Costs Motion and Cross-motion, and I reserved on certain other issues, allowing the parties to make alternative arguments that were dependent on whether certain impugned evidence would be allowed to stand.
I. First Preliminary Issue – Should the Plaintiff be permitted to file supplementary affidavit evidence relevant to the Security for Costs Motion?
[5] The Defendants take the position that regardless of whether the Sealing Order is appropriate in the circumstances, the Plaintiff should be precluded from filing the Unredacted May 9, 2022 Di Savino Affidavit because the Plaintiff was out of time to deliver further evidence in opposition to the Defendants’ Security for Costs Motion. Specifically, the Defendants argue that the order I made at the April 13, 2022 case conference precludes the Plaintiff from delivering such further evidence.
[6] Prior to the April 13, 2022 case conference, the Security for Costs Motion was scheduled to be heard on April 14, 2022. As part of its Cross-motion, the Plaintiff had been seeking an adjournment of the Security for Costs Motion in order to seek the Sealing Order and file additional evidence in opposition to the Security for Costs Motion. The Defendants submit that, at the April 13, 2022 case conference, the Plaintiff abandoned its adjournment request by confirming that it would not be seeking to introduce any further evidence in opposition to the Security for Costs Motion. The Defendants submit that the Plaintiff made no mention of an intention to continue to seek the Sealing Order with respect to such evidence and, instead, only referenced an intention to seek an order excluding some of the evidence filed by the Defendants’ in support of the Security for Costs Motion. The Defendants argue that the Plaintiff’s acknowledgement that it did not intend to deliver any further materials relating to the Security for Costs Motion was incorporated into my order from the April 13, 2022 case conference. They submit that allowing the Plaintiff to file additional evidence relevant to the Security for Costs Motion – whether or not subject to a Sealing Order – will be prejudicial to them because they will not have had an opportunity to reply to or cross‑examine on it, and that this could force yet another adjournment of the Security for Costs Motion.
[7] The Plaintiff argues that there was no intention to withdraw its request to file additional evidence in opposition to the Security for Costs Motion. The Plaintiff relies on the original notice of motion for the Cross-motion, which was served before the April 13, 2022 case conference, in which it seeks the Sealing Order with respect to material that it intended to file in connection with the Security for Costs Motion. The Plaintiff submits that the failure to raise the issue expressly at the April 13, 2022 case conference was an oversight. The Plaintiff says that the Defendants were advised of the oversight shortly after the case conference and that it immediately sought a further case conference to address the process for putting the Sealing Order issue before the court.
[8] At the hearing of the motion on May 17, 2022, I held that, although it is regrettable that the Plaintiff’s intention to file additional evidence relevant to the Security for Costs Motion was not expressly raised at the April 13, 2022 case conference, the Plaintiff would be permitted to proceed with the Cross-motion seeking a Sealing Order with respect to the Unredacted May 9, 2022 Di Savino Affidavit.
II. Second Preliminary Issue – Should the court make the Sealing Order?
[9] The second preliminary issue before me was the Plaintiff’s Cross-motion for a Sealing Order with respect to the Unredacted May 9, 2022 Di Savino Affidavit. The Plaintiff submitted that a Sealing Order was necessary because of the purported confidential and private nature of the evidence in that affidavit. The Plaintiff made reference to concerns that the Defendants would use the information improperly and provide it to Nick Di Savino (“Mr. Di Savino”), the ex-husband of the Plaintiff’s representative, Ms. Di Savino. The Plaintiff noted that Mr. Di Savino is running a business that competes with the Plaintiff’s business, and that he has sworn affidavits in support of the Defendants’ Security for Costs Motion. The Plaintiff expressed concern that the information would be used by Mr. Di Savino to the commercial prejudice of the Plaintiff and in connection with unrelated, contentious matrimonial proceedings that are ongoing between the Ms. Di Savino and Mr. Di Savino.
[10] In its submissions, the Plaintiff relied on evidence that Mr. Di Savino has opened mail addressed to the Plaintiff but delivered to Mr. Di Savino’s current residential address, and that he then provided this information to the Defendants. The Plaintiff argued that Mr. Di Savino is acting to undermine the Plaintiff’s business, including by naming his competing company with a name that is similar to the Plaintiff’s business name, diverting customers, and taking steps to make the Plaintiff unsuccessful. The Plaintiff argued that the Defendants are acting in collusion with Mr. Di Savino, and that its concerns about Mr. Di Savino’s conduct support the need for the Sealing Order with respect to the Unredacted May 9, 2022 Di Savino Affidavit.
[11] The Defendants took no position on the request for the Sealing Order, but noted the fundamental open court principle and the onus on the Plaintiff to satisfy the court that the Sealing Order is appropriate. The Defendants also submitted that a counsel’s eyes only form of sealing order would make it impossible for the Defendants to respond to the restricted evidence or cross‑examine on it, should they wish to do so.
[12] In terms of the requested Sealing Order, the Supreme Court of Canada recently adopted a new three-part test for discretionary limits on court openness, such as a sealing or redaction order, publication ban, or an order excluding the public from a hearing.[^1] In Sherman Estate, the Supreme Court held that a party seeking a discretionary limit on court openness must establish the following:
a) court openness poses a serious risk to an important public interest;
b) the order sought is necessary to prevent this serious risk to the identified interest because reasonably alternative measures will not prevent the risk; and
c) as a matter of proportionality, the benefits of the order outweigh its negative effects.[^2]
[13] Pursuant to Sherman Estate:
• limits on court openness remain the exception, not the rule;
• the only exceptions to court openness are ones that involve an “important public interest”; and
• to qualify for a sealing order or other exception to court openness based on privacy concerns, the claim must involve the protection of a person’s dignity, and the kind of information in issue “must consist of intimate or personal details about an individual” that reveals the “biographical core” of the applicant. Less serious intrusions on privacy “will generally be tolerated.”[^3]
[14] Applying Sherman Estate, I find that there is no basis to make a sealing order in the circumstances. With respect to the Plaintiff’s submission regarding alleged collusion between the Defendants and Mr. Di Savino, I find it troubling that Mr. Di Savino opened correspondence addressed to Plaintiff after he had resigned as an officer and director of the company and at a time when he was operating a competing business, and that he provided that information to the Defendants. I will return below to the admissibility or weight to be given to such evidence in connection with the Defendants’ Security for Costs Motion. However, the balance of the allegations regarding Mr. Di Savino’s alleged improper conduct vis-à-vis the Plaintiff are based on bald statements in Ms. Di Savino’s affidavits. Those allegations are devoid of any detail, supporting documentation, or other corroborating evidence. Further, there is nothing improper per se in the fact that Mr. Di Savino has sworn affidavits in support of the Defendants’ Security for Costs Motion.
[15] In summary, there is insufficient evidence to find that the public filing of the Unredacted May 9, 2022 Di Savino Affidavit would pose a serious risk to an important public interest, or that the Sealing Order is necessary to prevent such a risk because less onerous alternatives would not be sufficient.
[16] In the result, I held at the May 17, 2022 hearing of the Security for Costs Motion and Cross‑motion that the Plaintiff did not meet the test for the requested Sealing Order and dismissed that aspect of the Plaintiff’s Cross-motion.
[17] In support of its request for the alternative relief of a counsel’s eyes only order, the Plaintiff relied on Lundbeck Canada Inc. v. Canada (Minister of Health) 2007 FC 412 (“Lundbeck”). In my view, Lundbeck is distinguishable because it related to a request for a counsel’s eyes only order in the context of an intellectual property (patent) dispute. The reasons for granting such an order in Lundbeck are inapplicable in the current circumstances.
[18] Having declined to make the Sealing Order or a counsel’s eyes only order, I then asked Plaintiff’s counsel if the Plaintiff still wished to rely on the Unredacted May 9, 2022 Di Savino Affidavit in opposition to the Security for Costs Motion. Plaintiff’s counsel advised that the Plaintiff wished to file the Unredacted May 9, 2022 Di Savino Affidavit in unredacted form, and that it sought to rely on it in opposition to the Defendants’ Security for Costs Motion. As a result, I ordered that the court would recess in order to provide the Defendants’ counsel with an opportunity to: (i) review the Unredacted May 9, 2022 Di Savino Affidavit; (ii) make submissions on its admissibility; and (iii) make submissions on whether the Defendants’ Security for Costs Motion should proceed, or whether the Defendants would be maintaining their position that an adjournment of the Security for Costs Motion would be required in view of the Plaintiff’s late‑filed evidence.
[19] Following the recess, counsel for the Defendants advised that the Defendants would not be seeking an adjournment of the Security for Costs Motion. Counsel for the Defendants advised that, instead, the Defendants would make submissions on the admissibility and weight to be given to the evidence in the Unredacted May 9, 2022 Di Savino Affidavit. Those submissions and other issues with respect to the admissibility and weight to be given to the evidence in the Unredacted May 9, 2022 Di Savino Affidavit are dealt with below in my analysis of whether the Plaintiff should be required to post security for costs.
III. Third Preliminary Issue – the Plaintiff’s Cross-motion to exclude certain evidence of the Defendants alleged to have been obtained and shared improperly
[20] The evidence relied on by the Defendants on the Security for Costs Motion includes evidence contained in certain letters (the “Contested Letters”) addressed to the Plaintiff but delivered to and received by Mr. Di Savino at his current residence. It is undisputed that Mr. Di Savino opened the Contested Letters and provided information in those letters to the Defendants. It is also undisputed that information from the Contested Letters is included in various affidavits filed by the Defendants in support of the Security for Costs Motion. Finally, it is uncontested that Mr. Di Savino received and opened the Contested Letters after he had resigned as an officer and director of the Plaintiff and after he had started a competing business.
[21] The Plaintiff argues that:
a) when Mr. Di Savino received the Contested Letters, he was no longer a director, officer or employee of the Plaintiff, and that he had no right to open the Contested Letters or share the information in the letters with the Defendants; and
b) Mr. Di Savino should have forwarded the Contested Letters to Ms. Di Savino, the Plaintiff’s representative.
[22] The Plaintiff submits that all of the information in the Contested Letters, including any information about the financial wherewithal of the Plaintiff, should be struck out or given no weight because it was improperly obtained and should never have come to the Defendants’ attention. The Plaintiff also submits that, to the extent the information in the Contested Letters indicates that the Plaintiff has not made certain payments, the court should infer that such debts were only unpaid because the Plaintiff only learned of the payment obligations belatedly due to the fact that Mr. Di Savino kept the information from the Plaintiff.
[23] The Defendants argue that the Contested Letters were delivered to Mr. Di Savino at his residence, and that the Plaintiff failed to take steps to: (i) have the mail redirected; (ii) change the Plaintiff’s registered address; or (iii) remove Mr. Di Savino as a listed officer or director of the Plaintiff even though he had resigned from those roles before he received the Contested Letters. The Defendants submit that some of the Contested Letters were delivered to Mr. Di Savino after the Plaintiff was already aware Mr. Di Savino was still receiving certain correspondence addressed to the Plaintiff.
[24] The Defendants submit that Mr. Di Savino was effectively authorized to open the Contested Letters based on: (i) the Plaintiff’s failure to take steps to redirect the Contested Letters after it was aware the Contested Letters were going to Mr. Di Savino; (ii) the Plaintiff’s decision to leave Mr. Di Savino listed in public filings as a director and officer of the Plaintiff, and its failure to add Ms. Di Savino as a director or officer of the Plaintiff; and (iii) the Plaintiff’s failure to change the company’s registered address. The Defendants argue that the Plaintiff’s actions and failures to act were intentional decisions to insulate Ms. Di Savino from liability, and that, as a result, the Plaintiff had no reasonable expectation of privacy and is precluded from complaining that Mr. Di Savino opened the Contested Letters.
[25] Notwithstanding the Plaintiff’s failures to change its registered address or remove Mr. Di Savino as a listed officer and director of the Plaintiff in public filings, I find it troubling that Mr. Di Savino opened the Contested Letters. However, for the purposes of this motion, I need not decide on the admissibility of the evidence relating to information in or derived from the Contested Letters. As outlined below, even without that evidence, I find that there is sufficient evidence for the Defendants to meet their initial onus under Rule 56.01(1)(d) of demonstrating that there is good reason to believe that the Plaintiff has insufficient assets in Ontario to pay the Defendants’ costs.
[26] Before turning to the remaining issues on this motion, I note that the Plaintiff acknowledges that certain other correspondence included in the Defendants’ materials – originally contested by the Plaintiff as having been improperly obtained by the Defendants – came to Mr. Di Savino’s attention because he is personally implicated in the mattes referenced in the correspondence. Although the Plaintiff no longer seeks to have that information struck out of the record, it takes the position that such evidence should be given little or no weight. To the extent such evidence is relevant to my analysis of the test under Rule 56.01, I deal with the weight to be given to such evidence in my reasons below.
IV. Should an order be made for security for costs?
(a) The Test Under Rule 56.01(1)(d)
[27] Rule 56.01(1) involves a two part inquiry. During the first stage of the inquiry, the onus is on the moving party to demonstrate a basis for invoking one of the subparagraphs of the Rule.[^4]
[28] Pursuant to Rule 56.01(1)(d), the court, on motion by the defendant, may make such order for security for costs as it just where it appears that the plaintiff is a corporation and there is good reason to believe that the plaintiff has insufficient assets in Ontario to pay the costs of the defendant. The application of Rule 56.01(1)(d) has been explained as follows:
16 In the context of subparagraph (d), that does not require the moving party to actually prove that the respondent in fact, has insufficient assets to meet a cost order. All he must show is that there is good reason to believe that that is the case. Essentially, this means that the moving party must have some evidence, but not necessarily conclusive evidence, as to the insufficiency of the plaintiff's asset[s].
17 Once the moving party has accomplished that, he has a prima facie right to the order sought, subject to stage two of the inquiry. Stage two is where the onus shifts — it is then up to the plaintiff to prove, in a subparagraph (d) motion, that he does in fact have assets in the jurisdiction that can satisfy a cost order.[^5]
[29] The principles relating to stage two of the inquiry have been explained as follows:
21 As establishing the sufficiency of their assets falls under the second stage of the inquiry, the onus is on a plaintiff to establish that they (or each of them when the order is sought from a group of plaintiffs as is the case here) are able to meet that test. There is, again, a sound policy reason for approaching the matter in this way – who but the plaintiff is in a position to address their own financial situation?
22 When dealing with this subparagraph, it is not enough for plaintiff to simply point to their possessions and declare that there is surely enough there to satisfy a cost order. First, an independent evaluation must be performed with respect to each asset put forward. The court must consider how much each asset can reasonably be expected to fetch and assess if this would be adequate to meet a security order that is reasonable in the context.
23 The court must also have evidence at [sic] to the status of each asset: owning a house on paper means little unless a party actually has equity in that house. Similarly, the court has to be assured that the plaintiff has sufficient equity in the assets relied on in response to a motion for security for costs to meet a cost order.
24 Further, even if an asset is owned free and clear, the court has to be confident that there are no other creditors about with a higher priority, or a better claim, against those same assets. Parties engaged in litigation often find themselves embroiled in court proceedings with more than one party or creditor. If a moving party is denied security on the basis of sufficiency of assets, the court must be certain that those assets will still be there at the end of the day so there can be execution to satisfy a cost award.
25 Finally, the assets must be readily exigible and marketable, so that they can be easily transformed to cash to generate the funds needed to meet a cost order. As stated in Bluefoot Ventures Inc. v. Ticketmaster, 2008 CarswellOnt 877, a party should be able to recover costs ordered in their favour without having to resort to extraordinary measures to do so.
26 While the case law addressing the level of evidence needed most often speaks in the context of establishing impecuniosity, similar principles apply here. The court expects the plaintiff to make financial disclosure with full particularity, as they have the ability to speak to their financial status while the moving party would not.
27 As was stated in Uribe v. Sanchez [2006] OJ No. 2370, the financial evidence of the plaintiff must be set out with robust particularity, leaving no unanswered questions. Thus, the evidence about assets should be backed up by production of all appropriate supporting documents, and a reliable listing of assets and liabilities, income and expenses. A list of assets on its own is evidence in a vacuum. It provides an incomplete snapshot of a party’s actual financial situation and is of no real assistance in response to a motion of this kind. …
32 It therefore appears that the Rule does not mean any asset when it speaks of assets. The assets relied on to resist having to post security must be those that can meet both the letter and spirit of the Rule. If they cannot be readily used to pay off a cost order, the purpose of the Rule is defeated.[^6]
(b) Stage one inquiry – Is there good reason to believe the Plaintiff has insufficient assets?
[30] Applying the first stage of the two‑stage analysis, I find that the Defendants’ have satisfied their onus of demonstrating that there is good reason to believe that the Plaintiff has insufficient assets in Ontario to pay the Defendants’ costs. Support for this finding includes evidence with respect to the status of the Plaintiff’s business that:
a) the Plaintiff terminated its employees in November 2020, and at least one of its existing contracts was taken over by a competitor;
b) in July and August 2021, the Plaintiff was no longer in occupation of or carrying on business from its business premises at 665 Millway Avenue, Unit 35, Concord, Ontario;
c) as of October 15, 2021, the Plaintiff was ineligible for a WSIB Clearance Certificate; and
d) as of October 28, 2021, the Plaintiff’s business phone number appeared to no longer be in service.
[31] The Defendants also filed evidence of certain ongoing proceedings against the Plaintiff, including a civil action that includes a claim for breach of trust and damages for breach of contract. As the proceedings referenced in the materials had not yet been adjudicated, I do not rely on them in reaching my conclusion that the Defendants have met their onus on the stage one inquiry. Such evidence may be relevant as part of the stage two inquiry (as dealt with below), because it may have a bearing on whether the Plaintiff’s current assets will be available to satisfy a cost award. The same considerations apply to the letter attached as Exhibit “A” to the affidavit of Vincent Cafiso sworn March 7, 2022. That document is a demand letter addressed to Mr. Di Savino and demands payment from Mr. Di Savino pursuant to a guarantee that the lender (the Canadian Imperial Bank of Commerce) asserts was made with respect to indebtedness under a line of credit entered into between the bank, as lender, and the Plaintiff, as borrower.
[32] In response to the Defendants’ position with respect to the stage one inquiry, the Plaintiff disputed some of the Defendants’ evidence about the status of its operations. For example, in Ms. Di Savino’s affidavit delivered in response to the Security for Costs Motion, she denies that the Plaintiff has ceased to carry on business and asserts that it: (i) is an active company; (ii) has “several contracts”; and (iii) was eligible for a WSIB clearance certificate between May 20 and August 19, 2021. However, she does not respond to the evidence that by October 15, 2021, the Plaintiff was no longer eligible for a WSIB clearance certificate. Further, in November 2021, the Defendants served a request to inspect documents pursuant to Rule 30.04(2) and requested copies of the documents referred to in Ms. Di Savino’s affidavit, including the alleged “several contracts”. The Plaintiff did not respond to the request to inspect.
[33] While the onus is on the moving parties with respect to the stage one inquiry, Ms. Di Savino’s responding evidence contains nothing more than bald, unsupported statements with respect to the status of the Plaintiff’s business and its purported continuing business activity. I do not accept the Plaintiff’s submissions with respect to the status of the Plaintiff’s business because Ms. Di Savino’s evidence provides no information to demonstrate that any employees are performing services or other chargeable work on behalf of the Plaintiff, nor does it name any current or recent customer(s) of the Plaintiff. Further, despite service of a notice of examination, the Plaintiff refused (improperly) to produce Ms. Di Savino for cross-examination and failed to respond to the Defendants’ request to inspect. As a result, pursuant to Rule 34.15(1)(c) and (d), I find that Ms. Di Savino’s evidence with respect to the Plaintiff’s purported continuing business activity should be struck out or given no weight.
[34] The Defendants also argue that there is good reason to believe that the Plaintiff has insufficient assets in Ontario to pay the Defendants’ costs because the Plaintiff failed to respond to the Defendants’ request that the Plaintiff provide evidence it has sufficient assets in Ontario to satisfy an award of costs. In support of this position, the Defendants rely on 737071 Ontario Inc. v. Min-A-Mart Ltd.[^7] In response, and relying on Bolton Mechanical v. EBC Inc.[^8] and Briardown Estates Inc. v. Peters,[^9] the Plaintiff submits that the court should not draw a negative inference from the Plaintiff’s failure to respond to the Defendants’ request for disclosure of the Plaintiff’s assets and financial status.
[35] In my view, the failure of the Plaintiff to respond to the Defendants’ request for disclosure of financial information (essentially until it served the Unredacted May 9, 2022 Di Savino Affidavit) does not per se demonstrate that there is good reason to believe that the Plaintiff has insufficient assets to pay the Defendants’ costs.[^10] However, while the failure to respond would not be sufficient on its own, it is a factor that may be considered among other factors in assessing whether the Defendants have met their onus under the Rule 56.01 stage one inquiry. In any event, I find that, even absent this additional factor, the moving parties have adduced sufficient evidence (as noted above) to satisfy the stage one inquiry under Rule 56.01.
[36] I pause to note that in finding that the Defendants have satisfied their onus under the stage one inquiry, I have not relied on any of the Contested Letters because of the manner in which they were obtained. However, for the reasons outlined above, even without the Contested Letters, I find that there is sufficient evidence for the Defendants to satisfy their onus with respect to the stage one inquiry. As a result, the Defendants have a prima facie right to the order sought, subject to the stage two inquiry.
(c) Stage two inquiry – Has the Plaintiff demonstrated sufficient assets?
[37] With respect to the second stage of the inquiry, I find that the Plaintiff has not satisfied its onus of establishing that it has sufficient assets in Ontario to pay the Defendants’ costs.
[38] First, with respect to the status of the Plaintiff’s business and the argument that it has sufficient assets based on its purported continuing business activities, I do not accept Ms. Di Savino’s evidence for the reasons outlined above. As already noted, in addition to the Plaintiff’s improper refusal to produce Ms. Di Savino for cross‑examination or respond to the Defendants’ request to inspect, Ms. Di Savino’s evidence is made up of bald statements that fail to provide the required “robust particularity”.[^11]
[39] The Plaintiff also submits that there is evidence it has sufficient assets based on: (1) its accounts receivable; (2) certain funds held in a trust account of Bookman Law Chambers PC; and (3) certain real estate assets. I find that the evidence with respect to all of those purported assets is lacking.
[40] With respect to the Plaintiff’s accounts receivable, the affidavit evidence is merely a list of receivables in the aggregate amount of $1,631,202.64. Ms. Di Savino describes the receivables as “significant funds” and she states that the Plaintiff is “currently pursuing collection of the funds through counsel”. However, there is no evidence with respect to the collectability of the listed receivables, nor whether there are any creditors (secured or unsecured) who have claims to the receivables. The receivables are all in the column of receivables that are greater than 90 days old and do not include a single receivable in the “current”, “1-30 day”, “31-60 day” or “61-90 day” columns. There is no explanation of how old the receivables are beyond the “greater than 90 days” description. As well, other than the bald statement that the receivables have value, there is no evidence as to why they are reasonably likely to be collected even though they are greater than 90 days old (and, possibly, much older than that). Ms. Di Savino’s statement that “the Plaintiff is currently pursuing collection of these funds through counsel” is not sufficient to demonstrate that any value should be attributed to the accounts receivable (or any part of them).
[41] Ms. Di Savino’s evidence also indicates that there was $300,000 held in the trust account of Bookman Law Chambers PC as at May 6, 2022. However, Ms. Di Savino, not the Plaintiff, is listed as the client on the one‑page trust report with respect to the funds, and there is no evidence that the funds are an asset of the Plaintiff and no reference to the Plaintiff (or this action) on the trust report. Further, there is no evidence as to: (i) the number of matters for which the Bookman Law Chambers PC firm is currently retained to represent Ms. Di Savino; (ii) how much work in progress or accounts receivable may apply to this fund; (iii) the anticipated costs for prosecuting this action (or other retainers) that may be paid from these funds; or (iv) whether the funds will remain in trust or otherwise remain available to satisfy a costs award in favour of the Defendants.
[42] Ms. Di Savino’s affidavit evidence also states that she owns several properties in the Toronto area that “are of significant value”, either as a joint owner or through a company with respect to which she is the sole shareholder. Ms. Di Savino acknowledges that there is some financing on these properties and states that “there is still substantial equity in these properties”, but she provides no details of the financing of the properties. Ms. Di Savino’s evidence about the value of the properties is purportedly supported by appraisals that are attached as exhibits to one of her affidavits. However, the appraisals are inadmissible hearsay as they are purported expert evidence as to the valuation of real estate conducted by others (i.e. not by Ms. Di Savino, who is not, herself, a qualified appraiser). Without any direct evidence from the appraisers, I find that the appraisals are not properly in evidence and I give them no weight. Further, there is no evidence as to whether there are any creditors (secured or unsecured) of the holding company that, based on Ms. Di Savino’s evidence, is the owner of certain of the listed properties, and Ms. Di Savino does not give any evidence as to whether she has any creditors. In addition, the appraisals are outdated (they were prepared in October 2019), and I do not accept Ms. Di Savino’s bald statement that the properties have increased in value since 2019 as she is not qualified to provide such an opinion.
[43] In summary, I find that the Plaintiff has simply listed certain assets and asserted that they are sufficient to satisfy a cost order. There is no independent valuation of the listed assets showing their value and supporting the Plaintiff’s assertion that they would be adequate to satisfy a costs order.[^12] With respect to the real estate properties, even if they were owned by the Plaintiff, there is insufficient evidence as to the status of each of them. As noted in Chemical Vapour, ownership means little unless a party actually has equity in the property and that there is sufficient equity in the assets relied on in response to a motion for security for costs to meet a cost order.[^13]
[44] Further, the Plaintiff has not provided sufficient evidence to demonstrate that it does not have any other creditors with a higher priority, or a better claim, against the listed assets. Here, there is evidence of claims against the Plaintiff in various proceedings as well as problems with its WSIB Clearance Certificate. Based on the evidence, the Plaintiff has failed to show that the listed assets will be available to satisfy a cost award and that the Defendants would be able to recover costs ordered in their favour without having to resort to extraordinary measures to do so.[^14]
[45] Finally, as noted above, the Plaintiff must make financial disclosure with robust particularity to meet its onus. The evidence about assets should be backed up by production of appropriate supporting documents, and a reliable listing of assets and liabilities, income and expenses. Here, the listed assets are simply “evidence in a vacuum”; they only provide an incomplete snapshot of the Plaintiff’s financial situation and are of no real assistance to the court in response to the Security for Costs Motion.[^15] As a result, the Plaintiff has failed to meet the onus of demonstrating that it has sufficient assets in Ontario to satisfy a costs award in favour of the Defendants.
(d) Quantum of security
[46] With respect to the quantum of security to be posted, the Defendants submit that the Plaintiff should be required to post security in the amount of $173,286.58 on a substantial indemnity basis, or alternatively $129,677.06 on a partial indemnity basis. In response, the Plaintiff submits that if any security for costs is ordered, the quantum should be in the aggregate amount of $40,000.
[47] In the circumstances, I am not prepared to order security for costs based on the Defendants’ anticipated costs on a substantial indemnity basis, and instead assess the appropriate quantum based on the partial indemnity scale. In terms of quantum, I find that, at this time, it is appropriate to order security for costs in the aggregate amount of $105,000, which security shall be posted on a “pay as you go” basis, as outlined below.
(e) Additional relief sought by the Defendants
[48] In their notice of motion, the Defendants sought an order striking out the affidavit of Julia Di Savino sworn November 30, 2021 in response to the motion because she failed to attend for cross-examination. For the reasons outlined above, I find that Ms. Di Savino’s evidence with respect to the Plaintiff’s purported continuing business activity should be given no weight.
[49] The Defendants also sought the inclusion in the reasons for decision on the Security for Costs motion “of an observation or other statement to the affect that, on the basis of the evidence adduced on this motion, there is no genuine issue requiring a trial on the plaintiff’s claim”. I do not consider the request well-founded in the context of the Security for Costs Motion.
DISPOSITION
[50] For the reasons set out above, I order that the Plaintiff shall post security for costs in the aggregate amount of $105,000, payable as follows:
a) $35,000 within 20 days of this order;
b) $10,000 within 20 days of the examination for discovery of the last person examined;
c) $10,000 within 20 days of the completion of the mediation; and
d) $50,000 within 20 days of the completion of the pre-trial.
[51] With respect to costs, the Defendants seek costs of the motions in the amount of $76,000 on a substantial indemnity basis, or alternatively costs in the amount of $51,000 on a partial indemnity basis. They point to the significant volume of materials exchanged, including the number of affidavits and factums delivered by the parties and the various evidentiary and procedural issues that arose with respect to the motions. In addition to the ordinary factors, they also submit that the Plaintiff’s claims of collusion among the Defendants and Mr. Di Savino, improper conduct by Mr. Di Savino, and the assertions of improper conduct by the Defendants’ counsel were all unfounded and merit an award of costs on a substantial indemnity basis.
[52] The Plaintiff argues that any costs order must be proportionate with the matters in issue. The Plaintiff submits that the Defendants served multiple motion records that were unnecessary and drove up costs. The Plaintiff’s position is that all of the allegations made by the Plaintiff were proper and were directed at the Defendants rather than counsel. The Plaintiff submits that any costs ordered should be in the range of $10,000 on a partial indemnity basis or $15,000 on a substantial indemnity basis, which would be proportionate and more in keeping with the importance to the motions and the parties’ reasonable expectations.
[53] The motions took up a full day of hearing time that was preceded by two case conferences before me. The Defendants were successful on the Security for Costs Motion. The Plaintiff filed its evidence late at every stage of the motions, improperly refused to produce Ms. Di Savino for cross-examination, and was unsuccessful on its Cross-Motion for the Sealing Order. I also find that the Plaintiff’s conduct led to the unnecessary complication of this motion and materially lengthened it. However, although I have taken this into account in fixing the quantum of costs, I do not find that the Plaintiff’s conduct or the nature of the issues on the motions merits an award of costs on a substantial indemnity basis. In terms of quantum, I find that some of the Defendants’ materials were duplicative or unnecessary. As well, the Defendants’ success is counter-balanced to a small degree by the Plaintiff’s submissions with respect to the Contested Letters, which led me to determine that I would not rely on the information in those documents for the purposes of the Security for Costs Motion.
[54] 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, including the reasonable expectations of the parties on motions such as these. Having heard the submissions of the parties, and having considered the factors outlined in Rule 57.01, I find that it is fair and reasonable in the circumstances and within the reasonable expectations of the parties for the Plaintiff to pay the Defendants costs of this motion on a partial indemnity basis, fixed in the amount of $40,000 inclusive of disbursements and taxes, within 30 days.
R. Frank Associate J.
DATE: 13 September 2022
[^1]: See Sherman Estate v. Donovan (“Sherman Estate”), 2021 SCC 25 [^2]: Sherman Estate at para 38 [^3]: Sherman Estate at paras 63 and 75 [^4]: Chemical Vapour Metal Refinishing v. Terekhov, 2016 ONSC 7080 (“Chemical Vapour”) at para 15 [^5]: Chemical Vapour at paras 16-17 [^6]: Chemical Vapour at paras 21-27, 32 [emphasis added] [^7]: 737071 Ontario Inc. v. Min-A-Mart Ltd.I, 1996 CarswellOnt 1252 (“Min-A-Mart”) at para 11 [^8]: Bolton Mechanical v. EBC Inc., 2020 ONSC 3407 at para 21 [^9]: Briardown Estates Inc. v. Peters, 2007 CanLII 37887 (ONSC) (“Briardown”) at para 16 [^10]: See Briardown at para 16 [^11]: Chemical Vapour at para 27 [^12]: Chemical Vapour at para 21 [^13]: Chemical Vapour at para 23 [^14]: Chemical Vapour at paras 24-25 [^15]: See Chemical Vapour at paras 21-27, 32 [^16]: See Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 (C.A.)