Court File and Parties

COURT FILE NO.: CV-20-1696 DATE: 2023/05/23 SUPERIOR COURT OF JUSTICE-ONTARIO

RE: SHELLEY OTTELE, née RACINE, Applicant - and- AIMY RACINE, AIMY RACINE, ESTATE TRUSTEE OF THE ESTATE OF LEO RACINE, DECEASED and THE PUBLIC GUARDIAN AND TRUSTEE, Respondents

BEFORE: Gibson J.

COUNSEL: Olando Vinton, Counsel for the Applicant Amber Bonnell, Counsel for the Respondent, Aimy Racine Sarah Jones, Counsel for the Respondent, The Public Guardian and Trustee Erin Kadwell, Counsel for Nathan Spaling and Paquette Travers

HEARD: January 26, 2023

Endorsement

Overview

[1] In December of 2020, the Applicant Shelley Ottele, née Racine (“Shelley”) commenced an application naming the Respondents Aimy Racine in her personal capacity (“Aimy”), Leo Racine (“Leo”), the Applicant’s father who, at the time the application was commenced was a mentally incapable person, and therefore by his Power of Attorney Aimy Racine, and the Public Guardian and Trustee. Shelley is one of Leo’s three children. Shelley was estranged from Leo for several years prior to Leo being deemed incapable on March 30, 2020. Aimy resides in Waterloo, Ontario. Aimy developed a friendship with Leo and his late wife, Mary Racine (“Mary”) while attending the same church. Aimy coincidentally shared the same last name with Leo and Mary, however, she never held herself out to be their blood relative. On June 11, 2019, Leo and Mary executed Powers of Attorney for Property and for Personal Care, appointing Aimy as their Power of Attorney.

[2] The central claim in this application was that the Powers of Attorney, signed by Leo, were invalid because he was allegedly incapable at the time they were signed. Shelley sought to be appointed as Leo’s guardian, and also sought a million dollars in damages against Aimy, alleging fraud, unjust enrichment, and breach of fiduciary duty.

[3] Mary passed away on February 6, 2020. Leo died on October 12, 2022, since the commencement of this application and these motions.

[4] On January 8, 2021, Shelley brought an ex parte motion, seeking interim relief under the application. Justice Braid found that “the motion was completely inadequate,” lacking any evidence of mental incapacity of Leo, urgency, and evidence that Aimy would dissipate assets, or that Aimy took proceeds from the sale of the house for her own use or that the sale of the house was not an appropriate decision for the Power of Attorney to make. Justice Braid directed that a copy of her endorsement be included in all subsequent Motion Records for this matter.

[5] On requisition by the Respondents, Aimy Racine and the mentally incapable party Leo Racine, now deceased, an Order to Continue was granted on an ex parte basis.

[6] On December 2, 2022, Krawchenko J. dismissed the Applicant’s motion seeking (a) an Order to set aside the Order to Continue dated November 21, 2022; (b) that the Respondent’s counsel Amber Bonnell be cited in contempt and imprisoned (c) and that Amber Bonnell pay costs. In his reasons on his oral judgment delivered on that day, Krawchenko J. stated: “It is difficult for this court to understand why the Applicant, with the advice of her counsel, even considered instituting a motion to find criminal contempt. It was completely unwarranted, unsupported by the evidence or the jurisprudence, and a waste of limited resources and ultimately unprofessional and reprehensible in its intended or unintended attempt to besmirch the reputation of Ms. Bonnell.” The Applicant was ordered to pay costs fixed in the amount of $34,203.97 within 30 days.

[7] By her Amended Notice of Motion dated January 16, 2023, the Applicant moves for an order to stay all steps in the file CV-20-1696 pending an appeal in Divisional Court File 705/22; or, in the alternative, an order to adjourn all steps in CV-20-1696 pending a motion for a stay in Divisional Court File 705/22.

[8] This is a discretionary decision on the part of the Court. No persuasive basis has been established to grant such an Order. This motion is dismissed.

[9] The Respondent Aimy Racine, in her personal capacity and in her capacity as the Power of Attorney for Leo Racine, by her Notice of Motion dated June 24, 2022, brings a motion for security for costs in the amount of $75,000, to be posted within 30 days following such an Order. Aimy also seeks an Order restricting Shelley from taking any step in this proceeding, except an appeal of the Order if applicable, until such security is posted.

Law and Analysis

[10] Rule 56.01(1)(e) of the Rules of Civil Procedure provides that the Court may make an order for security for costs where there is good reason to believe that an application is frivolous and vexatious and that an applicant has insufficient assets in Ontario to pay a respondent’s costs.

[11] The general purpose of security for costs is to afford defendants a reasonable measure of protection for their costs. Security for costs balances the principles that “everyone should be able to have their day in court” and that “defendants must have reasonable protection from claims that have no merit”: Cigar500.Com Inc. v. Ashton Distributors Inc., 2009 ONSC 46451 at para. 2, citing Wall v. Horn Abbott Ltd..

[12] The test and associated principles to meet the threshold for security for costs under Rule 56.01(1) may be summarized as follows: (Coastline Corp. v. Canaccord Capital Corp., 2009 ONSC 21758 at para. 7):

a. The initial onus is on the defendant to satisfy the court that it “appears” there is good reason to believe that the matter comes within one of the circumstances enumerated in Rule 56.01;

b. Once the first part of the test is satisfied, “the onus is on the plaintiff to establish that an order for security would be unjust”;

c. The second stage of the test “is clearly permissive and requires the exercise of discretion which can take into account a multitude of factors.” The court exercises a broad discretion in making an order that is just;

d. The plaintiff can rebut the onus by demonstrating that:

i. The plaintiff has appropriate or sufficient assets in Ontario or in a reciprocating jurisdiction to satisfy any order of costs made in the litigation,

ii. The plaintiff is impecunious and that justice demands that the plaintiff be permitted to continue with the action, i.e. an impecunious plaintiff can establish that the claim is not “plainly devoid of merit”;

iii. If the plaintiff cannot establish that it is impecunious, but the plaintiff does not have sufficient assets to meet a costs order, the plaintiff must meet a high threshold to satisfy the court of its chances of success.

[13] Potential liability for costs discourages inappropriate litigant behaviour and ensures that the integrity of the Court’s process is protected: Elias v. Hawa, 2018 ONSC 5703, at para. 11.

[14] Under the first prong of the test, the moving party need not prove with certainty that one of the factors applies. In this case, Aimy is only required to establish that there is a “good reason to believe” that Shelley has insufficient assets to pay the costs. The onus is reflective of the reality that knowledge of the Applicant’s financial position lies primarily with the Applicant.

[15] In the context of a motion for security for costs, the Court of Appeal for Ontario has noted that the overriding principle to be applied in all circumstances is the justness of the order sought. At paras. 18-19 of Pickard v. London Police Services Board, 2010 ONCA 643, Watt J.A. stated:

[18] The standard imposed by “good reason to believe” does not demand that the motion judge reach a definitive conclusion, make an affirmative finding or actually determine that the appeal is frivolous and vexatious and that the appellant lacks sufficient Ontario assets to pay the appeal costs. Rather, “good reason to believe” suggests a tentative conclusion of absence of merit and assets: Schmidt v. Toronto-Dominion Bank (1995), 24 O.R. (3d) 1 (C.A.), at p. 5. After all, the order for security for costs is neither dispositive of the appeal nor fully informed in the absence of a complete record of the proceedings at first instance. The standard reflects an appropriate balance of competing interests, not demanding too much of the respondent or settling for too little from the appellant.

[19] A frivolous appeal is one readily recognizable as devoid of merit, as one having little prospect of success. The reasons may vary. A vexatious appeal is one taken to annoy or embarrass the opposite party, sometimes fuelled by the hope of financial recovery to relieve the respondent’s aggravation.

[16] In this case, Shelley is retired from being an autoworker at Chrysler for 18 years. She has not adduced any evidence as to her financial position, including any evidence of income, assets, savings, credit, or her ability to pay a costs award.

[17] I find that there is good reason to believe that Shelley has insufficient assets in Ontario to pay costs to Aimy on the conclusion of this application.

[18] Shelley bears the onus of convincing the court that an Order for security for costs would be unjust. She is required to provide convincing evidence in the form of sufficient financial disclosure to demonstrate that either she has sufficient assets in Ontario to satisfy any order of costs, or that she is impecunious, and therefore unable to post security. She has failed to adduce such evidence.

[19] Shelley is not impecunious. There is some evidence that the home she owns jointly with her husband was purchased for $244,000 in 2012. But she has not provided any evidence as to her ability or inability to raise such funds as may be necessary to satisfy a costs award.

[20] A close scrutiny of the merits of the application is warranted in this case, to determine whether the claim has a good chance of success: Zeitoun v. Economical Insurance Group, 2008 ONSC 20996 (SCDC), at para. 50.

[21] Such an assessment finds no foundation for confidence on the facts of this case. For Shelley to succeed in her application, she must establish that Leo did not exhibit the necessary capacity to appoint Aimy as Power of Attorney, committed fraud, and/or was negligent in exercising her duties. In her endorsement dated January 8, 2021, Braid J. stated in dismissing the ex parte motion that there was no evidence regarding Leo’s mental incapacity or that Aimy took proceeds of the sale of Leo’s house for her own use. No such evidence has since been produced. A plaintiff’s evidence that relies solely on allegations in a statement of claim which are denied by the defendants, without further evidence from the plaintiff, does not support a good cause of action: T.S. Publishing Group Inc. v. Shokar, 2013 ONSC 1755, at para. 35 (vii).

[22] On a motion for security for costs, a court may reach a tentative conclusion that the application appears to be so devoid of merit as to give “good reason to believe” that the claim is frivolous and vexatious without being satisfied that the claim is actually totally devoid of merit: Schmidt v. Toronto Dominion Bank. That is my tentative conclusion in this case.

[23] The apparent merits of the application, the presence or absence of an oblique motive for commencing the application, and Shelley’s conduct in the proceeding, are relevant to a determination of whether there appears to be good reason to believe that the application is frivolous and vexatious.

[24] In this case, Shelley has failed to substantiate with any degree of particularity the significant allegations that she has made against Aimy. Moreover, she pursued a meritless claim for contempt against Aimy’s counsel, which was dismissed by Krawchenko J. in the terms recounted above.

[25] I find that the conditions of s. 56.01(1)(e) are satisfied, as there is good reason to believe that the application is frivolous and vexatious and that the applicant has insufficient assets in Ontario to pay the costs of the respondent.

[26] The Respondent submits, and I accept, that if this case continues Aimy will be forced to expend considerable sums to defend against Shelley’s application, with little prospect of recovering any of her costs if Shelley is unsuccessful. The quantum of $75,000 sought is appropriate in this case.

[27] Given the imbalance of risk, this is an appropriate case where a security for costs order is warranted. The Respondent’s motion for security for costs will be granted.

[28] Counsel for both parties have submitted costs outlines for the motion. The Applicant’s counsel’s cost outline indicated total costs of $49,821.02 on a substantial indemnity scale, and $33,783.44 on a partial indemnity scale. The Respondent Aimy’s counsel’s costs outline indicates total costs of $38,717.76 on a substantial indemnity scale, and $25,253.24 on a partial indemnity scale.

[29] The Respondent has been the successful party on these motions. Costs on a partial indemnity scale are appropriate, having regard to the factors at Rule 57.01.

Order

[30] The Court Orders that:

1. The Applicant Shelley Ottele pay into Court $75,000 as security for the Respondent Aimy Racine’s costs in this application;
2. Until this security has been given, the Applicant Shelley Racine may not take any steps in the proceeding, except an appeal from the Order for security for costs;
3. If the security for costs is not paid within thirty (30) days of the date of this Order, the Respondent may move without notice to dismiss this application;
4. The Respondent Aimy Racine may move at any time for increased security for costs and for security with respect to the balance of the application; and,
5. The Applicant Shelley Ottele shall pay costs to the Respondent Aimy Racine on this motion fixed at $25,253.24, payable within 30 days.

M. Gibson J. Date: May 23, 2023