Court File and Parties

COURT FILE NO.: CV-19-629641

DATE: 2023/09/11

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: WISE ELEPHANT FAMILY HEALTH TEAM, Plaintiff

AND:

WISE ELEPHANT FAMILY HEALTH ORGANIZATION et al., Defendants

BEFORE: ASSOCIATE JUSTICE R. M. BROTT

COUNSEL: C. TAN, for the Plaintiff Email – ctan@thcllp.com

K. FISHER, for the Defendant Email – kfisher@rogersco.ca

ENDORSEMENT

[1] The within action was commenced by the plaintiff Wise Elephant Family Health Team (“WEFHT”) to recover $3.2 million allegedly misappropriated by thirty-five named defendants. The defendants Dr. Sanjeev Goel, Dr. Lopita Banerjee, Banerjee Goel Medicine Professional Corporation, Dancing Tiger Health Group Inc., Healthy Quality Innovation Collaborative, 16 Building Corp., 16 Technologies Corp and Peak Human Corp. (“these defendants”) served their Statement of Defence on or about April 14, 2021. These defendants seek an order that the plaintiff pay into court the sum of $500,000.00 as security for these defendants’ costs.

SUMMARY OF FACTS

[2] WEFHT is a not-for-profit corporation which operated as a Family Health Team providing healthcare services in the City of Brampton from 2010-May 2021, when it ceased operations. WEFHT’s sole source of funding was the Ministry of Health (“MOH”).

[3] WEFHT was comprised of healthcare professionals including nurses and nurse practitioners. It paid the salaries and costs of the clinic facilities of WEFHT. Under a funding agreement with the MOH, WEFHT was affiliated with the Wise Elephant Family Health Organization (“WEFHO”) which was comprised of doctors who directly received their compensation from the MOH. Two of the defendants, Dr. Goel and Banerjee, were on the Board of Directors of the WEFHT Board (“the Goel Board”) from its inception until they resigned in January 2019.

[4] A Treasury Board audit of the WEFHT conducted in 2018 noted deficiencies in the leadership/management of the Board including but not limited to failure to provide supporting documentation of expenditures and failure to disclose conflicts of interest to the MOH. These findings caused the Board to seek replacement members from among their patients (“the patient board”), none of whom had any financial interests relating to WEFHT.

[5] After being elected in 2019, the Patient Board discovered signs of financial misconduct by the Goel Board. It arranged for a forensic audit (“the Macaulay Forensic Report”) which documented suspicions of fraud, embezzlement and misappropriation of funds by the Goel Board from 2010-2018.

[6] In February 2021 the WEFHT retained Froese Forensic Partners Ltd. (“Froese”) to conduct a further forensic audit of the WEFHT over the same period of the Macauley report. The Froese Report was released on July 21, 2021. Froese had requested information from Drs. Goel and Banerjee (which the Macauley Report had not done), but the doctors failed to respond. The Froese Report found that Doctors Goel and Banerjee benefitted financially from the WEFHT, and further, they found perceived conflicts of interest. As well, the Froese Report documented numerous transactions that were not in compliance with the WEFHT’s obligations under the MOH Funding Agreement.

[7] After Drs. Goel and Banerjee’s disaffiliation from the WEFHT, they urged the MOH to defund and shut down the WEFHT. The MOH requested that the parties attempt to resolve their differences and reminded the WEFHT that the funding agreement required them to be affiliated with the WEFHO or another physician group. Ultimately, on December 14, 2020 the MOH sent notice to the WEFHT advising that the MOH was terminating the funding agreement and shutting down WEFHT effective March 31, 2021.

[8] Because the MOH was the sole source of funding of the WEFHT, WEFHT had to cease operations. The last funding installment from the MOH was January 15, 2021 and on May 30, 2021 WEFHT terminated its employees and its lease due to lack of funds.

[9] The WEFHT commenced an application for judicial review of the MOH decision and on June 8, 2021 the Divisional Court released Reasons dismissing the judicial review application. The within action was commenced on October 23, 2019.

THE MOTION

[10] These defendants bring this motion pursuant to Rule 56.01(1)(d) seeking an order ”as is just’ requiring the plaintiff to post security for costs because “there is good reason to believe that the plaintiff has insufficient assets in Ontario to pay the costs of these defendants”. The plaintiff resists this motion on the basis that it is impecunious - having only one asset - a bank account of approximately $7000.00, and that its claim has either a good chance of success or alternatively, that it is not devoid of merit.

[11] Caselaw has established a two-part test:

(a) the moving party must show that one of the six factors set out in Rule 56.01 exists; and,

(b) If the court is satisfied, the onus then shifts to the responding party who must show that an order for security would not be just in the circumstances 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 its claim is not plainly devoid or merit; or

(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 satisfy the court that the plaintiff’s claim has a good chance of success on the merits.

[12] The plaintiff accepts that step one of the inquiry is satisfied under Rule 56.01(1)(d).

[13] The plaintiff is a not-for-profit corporation. It asserts that it is impecunious – having assets of $7471.40 in its bank account. It has not received funding from its sole source of funding, the MOH, since January 2021. The Board of WEFHT is comprised only of directors and not shareholders from whom it can solicit additional funding. While the defendants argue that the plaintiff has failed to provide ample evidence of impecuniosity. I am satisfied on the evidence that the WEFHT has demonstrated impecuniosity.

[14] 2311888 Ontario Inc. v Ross, 2017 ONSC 1295 and Zeitoun v The Economical Insurance Group, 2008 CanLII 20996, both held that once a court is satisfied that the plaintiff has shown impecuniosity, the plaintiff must then demonstrate that its claim is not plainly devoid of merit. Zeitoun specifically notes that this is a low evidentiary threshold.

[15] Both the Macaulay Forensic Report and the Froese Forensic Report noted conflict of interest transactions directed by Drs. Goel and Banerjee which resulted in financial benefit to the physicians. The Reports also showed that the individuals employed by Dr. Goel’s businesses, and who were not WEFHT employees, were paid using WEFHT funds. Based on these Reports, I am of the view that the plaintiff’s claim is not devoid of merit.

[16] If however, I accept the defendants’ submissions that the plaintiff has failed to provide, with robust particularity, evidence of their impecuniosity, the plaintiff must demonstrate that its claim has a good chance of success. While the court is to consider the merits of the claim, the strength of the evidence is considerably less than on a motion for judgment. Again, based on the strength of the Macaulay and Froese Reports, I find the plaintiff’s claim does have a good chance of success. This finding is bolstered by the fact that these defendants have put forth no evidence to contradict the findings of either the Macaulay or Froese reports. These defendants take issue with the Macaulay Report being entitled ‘preliminary’. It has been referred to as such simply because additional steps were to be taken to improve the findings – not to invalidate its findings. These defendants have been in possession of the Macaulay Report for three years yet they have put forth no evidence to counter its findings.

[17] If a court finds that there is some merit to the plaintiff’s claim the court must nonetheless consider if refusing costs would be just in the circumstances (Know your City Inc. v Brantford (City) [2020] O.J. No. 5200, 2020 ONSC 7364). In determining what “is just”, the court is to consider the evidence of both parties and is to look at the matter holistically.

[18] There is evidence to suggest that Drs. Goel and Banerjee contributed to the impecuniosity of the plaintiff. They well understood that by disaffiliating the WEFHT and WEFHO, there would be a breach of the MOH agreement which would ultimately result in the shutdown of the WEFHT. The shutdown meant that WEFHT would have no source of funding. The actions of Drs. Goel and Banerjee and the two forensic reports clearly favour the plaintiff’s request to not pay security for costs to these defendants.

[19] Further, in 2021 Drs. Goel and Banerjee, in their personal capacities, commenced a separate action against the WEFHT and its directors seeking damages of $1.5 million. That claim arises from many of the same factual circumstances as the within action. WEFHT alleges, that if ordered to pay security for costs in the within action, they would have to abandon the within action due to their impecuniosity.

[20] It would be clearly unjust to cause WEFHT to abandon the within action yet still be subject to defending the claims commenced against them. In Better Business Bureau of Metropolitan Toronto Inc. v Tuz [1999] OJ No 1359, 28 CPC (4th) 334, the court held that “where there is a counterclaim and the facts on which the counterclaim is based is in large part on the same facts and circumstances raised in the plaintiff’s claim, this militates against an order for security for costs.”

[21] Having reviewed a multiplicity of factors including but not limited to the merits I find that is would be unjust in all of the circumstances to order the plaintiff to pay security for costs to the defendants. The defendants’ motion is dismissed with costs to the plaintiff.

[22] At the conclusion of oral argument, both counsel agreed that the court should fix costs at the time of the release of its Reasons. Following the hearing, and in breach of the Rules which require that costs outlines be exchanged in advance of the hearing, the parties uploaded their Costs Outlines to CaseLines. The plaintiff seeks partial indemnity costs in the amount of $15,363.48 and these defendants’ costs outline is in the amount of $21,287.96 (inclusive of $4763.20 for disbursements) on a partial indemnity basis.

[23] It is the objective of Rule 57.01 that costs be fixed in an amount that is fair and reasonable for the unsuccessful party. Other Rule 57.01 factors include the difficulty of the motion, the importance of the relief sought and the conduct of counsel. Here, there is no question that these defendants delayed in the bringing of this motion. They advised in May 2021 that they intended to bring the motion, the 314-paragraph affidavit of their deponent Dr. Goel, was sworn on September 9, 2021 yet they failed to serve the motion record until July 2022.

[24] A motion for security for costs is not a complicated motion. While the facts of this action are somewhat lengthy, the materials filed far exceeded what is necessary for this motion. The moving party’s materials were over 1000 pages. The responding party filed a 122-paragraph affidavit (49 pages). As Justice Edwards stated in Lepp v Regional Municipality of York, 2022 ONSC 6978:

The single most important guiding principle as it relates to written advocacy might start with an old saying “less is more”. Put another way your motion judge will be greatly impressed with a motion record that contains only the documents that are fundamental to the determination of the motion.

[25] The costs outlines of both parties are not significantly different which suggests that the unsuccessful party would consider the plaintiff’s costs outline to be fair and reasonable. Taking into account the Rule 57 factors, costs are ordered payable forthwith by these defendants to the plaintiff fixed in the all-inclusive amount of $12,000.00.

ASSOCIATE JUSTICE RONNA M. BROTT

Date: September 11, 2023