Court File and Parties
COURT FILE NO.: CV-19-633037
SUPERIOR COURT OF JUSTICE – ONTARIO
RE: Jurgita Bernataviciute v. Panagiotis Tsiaras and Stefica Lipak
BEFORE: Associate Justice Graham HEARD: July 24, 2023
COUNSEL: Julien Bonniere for the plaintiff Matthew Samuels for the defendants (moving parties)
Reasons for Decision
(Defendants’ motion for security for costs)
[1] The plaintiff Jurgita Bernataviciute (“Jurgita”) alleges that she sustained personal injuries when, on January 13, 2018, she slipped and fell on ice while descending the outside staircase at 5389 River Road, Niagara Falls, Ontario (“the Property”). The defendants were the joint owners of the Property. Pleadings in the action were closed by March 31, 2020 and examinations for discovery of the plaintiff and the defendant Tsiaris were held on November 5, 2020.
[2] Jurgita’s oral discovery evidence is that she lived at the Property between 2011 and 2018. In 2015 or 2016, she moved into an apartment on the second floor of the Property, and continued to reside there on January 13, 2018.
[3] Jurgita is a citizen of Lithuania. She came to Canada in approximately July, 2011 under a working holiday program and applied for refugee protection status in or around March 2012. At an Ontario Refugee Protection Division (“RPD”) hearing on June 20, 2018, the RPD member determined that her application for refugee status was abandoned as her counsel appeared at the hearing but failed to proceed with the claim. On November 6, 2019, Annis J. of the Federal Court of Canada dismissed Jurgita’s application for judicial review and concluded that her claim for refugee protection was abandoned.
[4] On September 28, 2020, plaintiff’s counsel informed the defendants’ counsel that Jurgita was residing in Lithuania. At her examination for discovery on November 5, 2020, Jurgita testified that in December, 2019 she returned to Lithuania where she was residing with her parents, and she had no plans to relocate to Canada.
The motion
[5] The defendants now bring this motion for an order that Jurgita post security for costs on the basis that she is ordinarily resident outside Ontario.
Applicable Rule and case law
[6] The defendants move under Rule 56.01(1)(a) and (e) of the Rules of Civil Procedure:
56.01(1) The court, on motion by the defendant or respondent in a proceeding, may make such order for security for costs as is just where it appears that,
(a) the plaintiff or applicant is ordinarily resident outside Ontario; . . .
(e) there is good reason to believe that the action or application is frivolous and vexatious and that the plaintiff or applicant has insufficient assets in Ontario to pay the costs of the defendant or respondent.
[7] The case law in Ontario establishes a two stage enquiry to determine whether the court should make an order for security for costs. As stated in Hallum v. Canadian Memorial Chiropractic College, 1989 CarswellOnt 896 at para. 10:
10 Rule 56.01 which empowers a court to order security for costs establishes a two step inquiry. First, the defendant must show that it “appears” that one of the six factors set out in paragraphs (a) through (f) of Rule 56.01 exists. Secondly, if the defendant can clear the first hurdle, the court may make any order as to security for costs “as is just”. I take this second stage to require an inquiry into all factors which may assist in determining the justice of the case. I also take the discretion created by this second stage as permitting orders which range from an order requiring full security for costs in a lump sum payment to an order which provides that no security for costs need be posted. Horvat et al. v. Feldman et al. (1986), 15 C.P.C. (2d) 220 (Ont. H.C.). [emphasis added]
[8] Then, as stated in Cobalt Engineering v. Genivar Inc., 2011 ONSC 4929 (S.C.J.) at para. 16:
16 Once the first part of the test is established, the onus is on the plaintiff to establish that an order for security would be unjust. The plaintiff can rebut the onus by demonstrating that (a) the plaintiff has sufficient assets in Ontario or in a reciprocating jurisdiction to satisfy an order of costs made in the litigation; (b) the plaintiff is impecunious and the claim is not plainly devoid of merit; or (c) even if the plaintiff is not impecunious but the plaintiff does not have sufficient assets to meet a costs order, that it meets a high threshold for success (Coastline Corp. v. Canaccord Capital Corp., [2009] O.J. No. 1790 (Ont. Master). [emphasis added]
[9] With respect to the first stage of the enquiry, Jurgita acknowledges that she lives in Lithuania and is therefore ordinarily resident outside Ontario. She also acknowledges that she has no assets in Ontario or anywhere else. As set out in greater detail below, Jurgita submits that an order for security for costs would not be just because she is impecunious.
[10] The following case law is applicable to the issue of impecuniosity:
As stated in Cobalt Engineering, supra, if the applicants can demonstrate impecuniosity, they can defeat a motion for security for costs provided that their claims are not clearly devoid of merit. This is a very low evidentiary threshold. (See: Zeitoun v. Economical Insurance Group (2008), 91 O.R. (3d) 131 (Div. Ct.) at para. 49)
Where impecuniosity has not been shown, a legitimate factor in deciding whether or not it would be just to require security for costs is whether the claim has a good chance of success. (See: Zeitoun, supra at para. 50)
The quality of the evidence required to establish impecuniosity is described by Quinn J. in Morton v. Canada (Attorney General), [2005] O.J. No. 948, a case in which security was sought from plaintiffs residing in Pennsylvania (at paragraph 32):
32 In motions of this nature, the financial evidence of the plaintiffs must be set out with robust particularity. There should be no unanswered material questions, as is the case here. It is worth remembering that the financial status of the plaintiffs is known only to them. . . . Full financial disclosure is required and should include the following: the amount and source of all income; a description of all assets (including values); a list of all liabilities and other significant expenses; an indication of the extent of the ability of the plaintiffs to borrow funds; and, details of any assets disposed of or encumbered since the cause of action arose.
[11] I will address the defendants’ argument in their factum that the enquiry as to whether an order for security for costs would be unjust is also triggered by Rule 56.01(1)(e) because there is good reason to believe that Jurgita’s action is frivolous and vexatious and she has insufficient assets in Ontario to pay their costs. Jurgita concedes that she has no assets in Ontario or anywhere else, so the question is whether her action is frivolous and vexatious.
[12] The defendants submit that the plaintiff’s failure to provide a sworn affidavit of documents, combined with the fact that she has produced limited medical documentation from no later than April, 2018, and no income loss documentation, demonstrates that her claim is frivolous and vexatious. I disagree.
[13] The medical documentation includes hospital records from Niagara Health including a note dated January 14, 2018 stating: “Injured Lt shoulder by falling down icy stairs. Went to St. Cath Hosp. yesterday and was told nothing. Then was called and told had an undisplaced fracture.” The records include a “Request for consultation” for “left shoulder injury, # [fracture] greater tuberosity.” The treatment records from Athlete’s Care Sports Medicine Centres include a modified note dated April 30, 2018 indicating that Jurgita was seen regarding the injury sustained on January 13, 2018, she had attempted to return to work on March 15, 2018 “which caused a flare of her symptoms as well as numbness and tingling down her L arm. It has been suggested that she take some additional time off work and return on April 26, 2018 with modified duties.”
[14] The fact that the medical records reflect an objective injury to the plaintiff’s left shoulder is sufficient proof that the claim is not frivolous and vexatious. Rule 56.01(1)(e) does not therefore provide any additional basis for the court to embark on the enquiry as to whether an award of security for costs would be just.
Issues on the motion
[15] Jurgita acknowledges that she has resided in Lithuania since December 2019 and has no plans to return to Canada. She concedes that she is “ordinarily resident outside Ontario”, which means that she falls within Rule 56.01(1)(a), which triggers the enquiry as to what, if any, order for security for costs would be just.
[16] Based on the case law reviewed above, Jurgita can demonstrate that an order for security for costs would be unjust if she is impecunious and the action is not clearly devoid of merit; if she cannot establish impecuniosity, she can successfully resist the motion if she can demonstrate that the action has a good chance of success (see: Zeitoun and Cobalt Engineering, supra). Accordingly, the issues to be addressed on this motion are:
- Can the plaintiff establish that she is impecunious, and if so, can she demonstrate that her claim is not clearly devoid of merit?
- If the plaintiff cannot establish that she is impecunious, can she demonstrate that her action has a good chance of success?
- If security is to be ordered, what is the appropriate quantum?
Evidence on the motion
[17] The plaintiff acknowledges that she has been ordinarily resident outside Ontario since December, 2019. The defendants’ evidence with respect to when and why she returned to Lithuania is summarized in the preamble to these Reasons.
[18] The evidence that Jurgita relies on to substantiate her alleged impecuniosity, contained in her responding affidavit sworn March 3, 2022 and her supplementary affidavit sworn July 12, 2023, is:
- She currently resides in Lithuania with her parents. She alleges that as a result of her injuries she has been unable to work and has no assets nor any source of income in any jurisdiction. (paras. 4-5)
- She does not own any real property, personal property or investments in any jurisdiction. (para. 6)
- She does not have any bank accounts and is completely financially dependent on her parents. She has no need for a bank account as she has no savings or income. (para. 7)
- As of July 12, 2023, she is still unemployed, receives no income or “monetary social assistance”, and is “still completely financially dependent” on her parents. She has no relevant documentation with respect to income or taxation as she has never opened a bank account or filed taxes in Lithuania. (supplementary affidavit paras. 3-4)
- The only document in her possession with respect to a bank statement is a letter from “Swedbank” dated September 20, 2022 stating that she had a bank account close due to inactivity. Before receiving this letter, she was not aware of any bank account in her name at Swedbank and she presumes that the account may have been opened through “some automatic administrative function” related to the renewal of her Lithuanian passport. (supplementary affidavit para. 5)
- She would be unable to pay security for costs, which would prevent her action from proceeding. (supplementary affidavit para. 6)
[19] The plaintiff’s evidence with respect to the merits of the claim, which is contained entirely in her first affidavit, is:
- She slipped and fell on a patch of ice on the “outside stairwell” of the defendants’ Property in Niagara Falls. The defendants, as the owners of the Property, had a statutory duty under the Occupier’s Liability Act to maintain the stairwell in a safe condition. The plaintiff had no other means of access to her apartment on the second floor of the Property.
- Before the incident in which she fell, the plaintiff advised the defendants that the stairs were too narrow and were unsafe.
- At the time that she fell, she was wearing winter boots.
- As indicated above, the hospital records from St. Catharines General Hospital and the treatment records from Athletes Care Sports Medicine Centres substantiate the undisplaced fracture to her left shoulder.
[20] The defendants’ supporting affidavit does not contain any evidence relating to the merits of the action. They plead in their statement of defence that they entered into a verbal agreement with the plaintiff whereby she would be responsible for maintaining the stairwell, and that the plaintiff’s fall occurred as a result of her own negligence. They state in their factum that the plaintiff acknowledged at her examination for discovery that she purchased a bag of salt and distributed that salt on the ice, but there is no evidence in the motion materials to this effect.
Submissions of counsel
[21] Defendants’ counsel submits that the evidentiary threshold to establish a plaintiff’s impecuniosity as a basis to refuse an order for security for costs requires a high level of detail. In this case, the plaintiff’s evidence with respect to her financial position consists largely of bald statements that she has no assets or income. The letter from Swedbank refers to a bank account from which the plaintiff could have obtained records. Also, she was working in Canada before the accident, and returned to work at reduced hours a few months after the accident.
[22] Defendants’ counsel further submits that the plaintiff has provided no evidence regarding any efforts to borrow funds to post security. She has also not disclosed the expenses that her parents are apparently paying for her. There is no evidence as to whether the plaintiff had any savings from the income that she was earning in Canada.
[23] Plaintiff’s counsel submits that the plaintiff has provided ample evidence of her impecuniosity in her two affidavits (which I have summarized above). He highlights the statement in her supplementary affidavit sworn July 12, 2023 that she has “no relevant documentation with respect to income or taxation.” There was no cross-examination on her affidavits. A security for costs order would not be just because it would prevent her from proceeding with her action.
Analysis and decision
[24] As stated, Jurgita is ordinarily resident outside Ontario and is caught by Rule 56.01(1)(a). The court must therefore consider whether she can establish that an order for security for costs would be unjust. Jurgita submits that she is impecunious and that an order that she pay security for costs would be unjust because it would be impossible for her to comply with any such order and she would lose her ability to obtain an adjudication of her action on the merits.
[25] The case law reviewed above requires that on a motion for security for costs “the financial evidence of the plaintiffs must be set out with robust particularity” (see: Morton, supra). The crucial issue on the motion is whether Jurgita has provided sufficient evidence of her financial circumstances to demonstrate impecuniosity.
[26] The defendants submit that the plaintiff’s evidence of her alleged impecuniosity is inadequate because it consists primarily of bald statements, with no supporting documentation other than the letter dated September 20, 2022 from Swedbank, stating that she had a bank account closed due to inactivity.
[27] As reviewed above, Jurgita’s sworn evidence with respect to her alleged impecuniosity is that she is unemployed, resides with her parents on whom she is completely financially dependent, and has no assets or property of any kind, no income and no bank account. She also deposes, in her most recent affidavit, that she has no relevant documentation with respect to income or taxation in her possession as she has never opened a bank account or filed taxes in Lithuania. She was not aware of the Swedbank account until she received the letter informing her that the account was closed due to inactivity and speculates that it may have been opened when she renewed her Lithuanian passport.
[28] Defendants’ counsel states in their factum, although with no corresponding evidence in their motion record, that the plaintiff’s 2013 to 2018 tax returns indicate that she was earning over $30,000.00 in taxable income. Defendants’ counsel submits that the degree of financial disclosure required from the plaintiff warrants some evidence as to whether she accumulated any savings during this time.
[29] The plaintiff’s Canadian earnings from 2013 to 2018 do not assist in determining her current financial means. Annual earnings in the $30,000.00 range would have allowed her to support a modest lifestyle but it is not reasonable to suggest that she would accumulate any significant savings from that level of income. Her failure to account for the use of income from more than four years ago does not constitute a failure to provide sufficient disclosure of her current financial status.
[30] Defendants’ counsel also submits that the plaintiff’s financial disclosure should include an accounting of her living expenses. Jurgita has stated in both of her affidavits that she is completely financially dependent on her parents, with whom she resides. Given this evidence, any accounting of what expenses Jurgita’s parents pay on her behalf would be of no assistance because the point is that she herself does not have the means to pay any of those expenses.
[31] The question is whether Jurgita’s verbal evidence is sufficient to meet her burden to demonstrate impecuniosity absent any supporting documentation. Jurgita’s evidence consists of uncontradicted sworn statements that she has no income or property, and she has never filed taxes in Lithuania or knowingly opened a bank account there. It is difficult to imagine what documentation could possibly exist to substantiate these statements and there is no basis on which to reject them. I accept that based on her affidavit evidence, the plaintiff has met her onus to demonstrate that she is impecunious.
[32] The decisions in Zeitoun and Cobalt Engineering, supra are clear that if a plaintiff can demonstrate that she is impecunious, she should not be required to post security provided that her claim is not clearly devoid of merit, which is a very low evidentiary threshold. The plaintiff’s evidence is that she slipped on a patch of ice on the stairs leading from her apartment, she pleads that the defendants had a statutory duty to maintain the safety of the Property, and she sustained an undisplaced fracture of her left shoulder when she fell. Acknowledging that the defendants have pleaded that the Plaintiff had agreed to maintain the stairwell, there is at least a triable issue of liability with an objective injury, which supports the conclusion that the claim is not clearly devoid of merit.
[33] For these reasons, I conclude that the plaintiff has met her onus to demonstrate both that she is impecunious and that her claim is not clearly devoid of merit. It would therefore be unjust to order that she post security for costs and accordingly, the motion is hereby dismissed.
[34] For completeness, I will address the plaintiff’s reliance on a document published by the Lithuanian Courts to argue that a security for costs order is unnecessary because there is an established procedure for the enforcement of foreign judgments through the Court of Appeal of Lithuania. However, this procedure requires an application to the Court, with all documents “written only in Lithuanian”, and does not provide a successful defendant in an Ontario action with a straightforward means to enforce an Ontario judgment in Lithuania.
[35] As I have ruled that the plaintiff is not required to post security for costs, it is not necessary to consider the quantum of security.
Costs
[36] At the conclusion of the hearing, counsel agreed that the successful party should be awarded partial indemnity costs of the motion fixed at $4,000.00 inclusive of fees, HST and disbursements. The plaintiff having been successful in opposing the motion, the defendants shall pay the costs of the motion fixed at $4,000.00 payable within 30 days.
ASSOCIATE JUSTICE GRAHAM
Date: July 25, 2023