Endorsement

Introduction

COURT FILE NO.: CV-24-00001933-0000
DATE: 2025-01-06
SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Ronald Dawson, Applicant
AND: Jaspreet Kaur and Diane Salman, Respondents
BEFORE: Kurz J.
COUNSEL: Ronald Dawson, Self-represented; Darren Marr, for Jaspreet Kaur; Diane Salman, Self-represented
HEARD: December 19, 2024

[1] Jaspreet Kaur (“Kaur”), one of the two Respondents in this proceeding, moves for an order requiring that the Applicant, Ronald Dawson (“Dawson”), post security for costs of this application. The other Respondent, Diane Salman (“Salman”), supports Dawson in his opposition to Kaur’s motion.

[2] Dawson has applied for a declaration that the real property located at 5125 Harvester Road, Unit 2, Burlington (the “Property”), whose title is registered in the sole name of Salman, is in fact held in a bare trust for himself.

[3] The issue is important to the parties because Kaur obtained a consent judgment against Salman on October 19, 2023 for $409,041.85 plus interest during the course of a summary judgment motion before Agarwal J. Kaur then registered a writ of execution against Salman on October 23, 2023. Kaur wishes to enforce the writ against the Property by sheriff’s sale.

[4] Both Dawson and Salman oppose the sheriff’s sale. Both assert that Dawson holds equitable title to the Property while Salman only holds title as his bare trustee. At present, the enforcement of Kaur’s writ of execution against the Property is stayed pending the completion of this application.

[5] Kaur argues that she is entitled to security for costs against Dawson because:

1. He has failed to pay three costs orders;
2. Dawson is a nominal party, acting at the behest of Salman; and
3. This proceeding is frivolous. Kaur asserts that this application lacks merit and that it seeks to profit from a fraud upon the court in Dawson’s previous matrimonial proceedings.

[6] On October 24, 2024 I granted Dawson’s request for an adjournment of this motion, peremptory on him, in order to allow him to respond to the motion. His lawyer had just removed himself from the record. In my endorsement, I set out a timetable for the exchange of further materials. It was not followed as neither Dawson nor Salman filed any responding affidavits.

[7] While he has not filed any responding materials for this motion, Dawson relies on one of the two affidavits he filed in support of this application before this motion was brought. That affidavit contains a copy of what he and Salman claim to be a handwritten trust agreement between them regarding the Property. Kaur relies on Dawson's other affidavit. It contains what she describes as an admission of Dawson’s fraudulent purpose in placing title to the property in Salman’s name.

[8] At the commencement of the motion, I made clear to both parties that in determining this motion, I can only rely on properly sworn and filed affidavit evidence. While both Dawson and Salman attempted to make oral submissions which refer to alleged facts not contained in the evidence before me, I made it clear that I could not rely on those oral submissions as evidence.

[9] For the reasons to follow, I grant this motion in part.

Background

[10] Salman and Dawson were common law partners at the time that this proceeding commenced. They claim to have now separated.

[11] On April 26, 2022, 2861808 Ontario Inc. (“286”) a corporation controlled by Salman granted a second mortgage to Kaur (the “Mortgage”). Salman signed a guarantee of 286’s debt to Kaur under the Mortgage. On February 21, 2023, after the Mortgage fell into arrears, Kaur sued 286 and Salman. She later brought a summary judgment motion. On October 19, 2023 Agarwal J. granted Kaur a consent judgment against Salman and 286 for $409,041.43 plus interest (the “Judgment”). That judgment remains unpaid.

[12] On October 23, 2023 Kaur caused a writ of seizure to be issued in Halton, based on the Judgment. On March 27, 2024 Kaur directed the Sheriff of the Halton Region to sell the Property in order the satisfy the writ of seizure and sale. However, on September 12, 2024 Mills J. ordered on consent that the sheriff’s sale of the Property be postponed until after this application is completed.

[13] Salman purchased the Property in her name on January 31, 2012. All of the documents related to the purchase were in her name. None referred to a trust agreement with Dawson or her holding title in trust for anyone.

[14] In his undated affidavit, apparently sworn on May 16, 2024 [1], Dawson offers an explanation for what he claims to be his decision to purchase the Property in Salman’s name. He deposes that:

In or about December 2011, having been thrown out of the matrimonial home as a result of an acrimonious separation with my ex-wife, I decided to purchase a property mainly for storage purposes for my many items and belongings that I could not take with me to Diane [Salman]’s home where she had just welcomed me to stay.

[15] Dawson adds:

As she my ex-wife [sic] had threatened that she would see to it that I lost every dime and every item that I owned, I did not want to take chances with this new property I was contemplating to buy so I decided to put it in Diane’s name.

[16] Kaur relies on this portion of Dawson’s May 16, 2024 affidavit as proof of an intent to defraud his ex-wife in their matrimonial proceedings by hiding an asset from her.

[17] In a second affidavit, sworn August 29, 2024, Dawson offers a different explanation for his purported decision to buy and place the Property in Salman’s name. Rather than fear that his ex-wife would take “every dime” from him, Dawson claimed that his motivation was to protect his car collection (his “babies”) from his vengeful wife. He claimed that she was jealous of his devotion to that collection and may have harmed his “babies”.

[18] The second Dawson affidavit fails to explain why he changed his story regarding his motivation for placing the Property in Salman’s name. However, the change came after Mills J. found on May 30, 2024, based on Dawson’s first affidavit, that he came to the court lacking “clean hands”. Mills J. made that finding because Dawson admitted, as set out above, that he chose to hide the existence of the Property in his matrimonial litigation.

[19] Dawson has produced the Application he issued to commence his litigation with his ex-wife on November 9, 2012, nine months after the Property was purchased. Dawson concedes that his court documents for that proceeding never disclosed the existence of his purported trust interest in the Property.

[20] While Dawson deposed that he provided the funds to purchase the Property, the direct evidence he offers that he is the source of those funds is ambiguous. It consists of these documents:

1. A single lined sheet of paper containing four handwritten receipts under the heading of “5125 Forester Road Unit 2”. The four receipts total $97,000. They record receipt of a total of $97,000 from Salman and her daughter, Kristian Salman. The signature of the person providing the receipts is illegible.
2. A bank record showing a cheque for $11,000 issued on January 30, 2012, the same day as one of the handwritten receipts, also for $11,000. However the actual cheque in question is not produced and the bank record does not set out the name of the person to whom the cheque was endorsed.
3. A typewritten receipt from a law firm for the $10,000 deposit on December 28, 2011. That receipt states that the funds were received from Kristian Salman.

[21] Dawson relies on a copy of a handwritten trust agreement between himself and Salman, dated January 31, 2012 and signed by both of them. That is the date of the closing of the purchase of the Property. The agreement is set out at the bottom of a copy of the account Salman received from her lawyers for the purchase of the Property. It states, in full capitals, as follows:

I DIANE SALMAN, CONFIRM RECEIPT OF TOTAL SUM OF $86,000 FROM RONALD J. DAWSON TO BE USED AS A DOWN PAYMENT + CLOSING COSTS. FOR TO BE GIVEN [sic] TO PURCHASE AND HOLD FOR 5125 HARVESTER RD. UNIT #2 BURLINGTON ONTARIO CANADA. ON BEHALF OF RONALD J. DAWSON IN TRUST. IF PROPERTY IS TO BE SOLD ENTIRE PROCEEDS WILL BE GIVEN TO RONALD J. DAWSON. THE PROPERTY TO BE USED BY RONALD J. DAWSON TO STORE HIS PERSONAL PROPERTY.

[22] Despite the existence of this document all of the conveyancing documents produced from Salman’s lawyer, including her statement of adjustments, trust statement and invoice, are in Salman’s name alone. The trust ledger states that the closing funds came from Salman.

[23] In his second affidavit, Dawson also offers copies of two other documents which he relies on to support his claims. The first is a copy of a lease that he signed on August 12, 2023 as landlord, with a tenant, to rent the Property. That lease was signed almost four months after April 19, 2023, when Salman issued her statement of defence and counterclaim in the Kaur action against 286 and herself.

[24] Dawson’s other document is a copy of a CRA business questionnaire which he claims Salman filled out in 2014 regarding her business. In that questionnaire, Salman purportedly represented to CRA that the Property was held in trust, without saying for whom it was held in trust. The questionnaire states that Salman was attaching the trust agreement. But the copy relied upon by Dawson has no attachment. While it is questionable whether the references to Salman and the questionnaire are admissible in this motion under r. 39.01(4), no objection to that evidence was raised. I have considered the questionnaire but given it little weight.

Litigation History of this Proceeding and Previous Costs Awards

[25] Dawson commenced this proceeding on or about May 15, 2024. On May 30, 2024 Dawson moved to stay the sheriff’s sale of the Property. Mills J. refused to stay the sale, finding the Dawson failed to come to the court with “clean hands”. She wrote:

[8] I do find that Mr. Dawson does not come to Court with clean hands. He admits to having orchestrated the clandestine purchase transaction to shield the Property from his former spouse while they were engaged in an acrimonious separation. Whether the purpose was financial or to protect his beloved motor vehicles, the scheme to conceal the Property had a nefarious and perhaps fraudulent purpose.

[26] Mills J. ordered Dawson to pay costs of $7,856.70 plus HST within 30 days.

[27] Dawson attempted to appeal the Mills J. order. However, he directed his appeal to the wrong court, the Court of Appeal for Ontario rather than the Divisional Court. He ultimately abandoned his appeal and was ordered by the Court of Appeal to pay $750 in costs.

[28] On September 12, 2024 Mills J. ordered, on consent, that the sheriff’s sale of the Property be postponed until after this application is completed. That was a term of a consent to an adjournment of the application, requested by Kaur, after it had been late-served upon her.

[29] On September 19, 2024 Chang J. set out a timetable for the exchange of materials for this motion, which was originally scheduled for October 24, 2024.

[30] On October 24, 2024 Dawson requested an adjournment of this motion because his previous counsel had recently been removed from the record. I granted the request but ordered him to pay costs of $750. I set December 19, 2024 as the return date of the motion. On that date, it was argued before me.

Jurisdiction to Grant Security for Costs

[31] The jurisdiction to grant security for costs is found in r. 56.01(1)(c) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, which states:

Where Available

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;

(b) the plaintiff or applicant has another proceeding for the same relief pending in Ontario or elsewhere;

(c) the defendant or respondent has an order against the plaintiff or applicant for costs in the same or another proceeding that remain unpaid in whole or in part;

(d) the plaintiff or applicant is a corporation or a nominal plaintiff or applicant, and there is good reason to believe that the plaintiff or applicant has insufficient assets in Ontario to pay the costs of the defendant or respondent;

(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; or

(f) a statute entitles the defendant or respondent to security for costs.

[32] The test under r. 56.01 is whether it appears that certain circumstances apply. That means that the court must find that there is good reason to believe that they apply. But it is not necessary, to meet that aspect of the test for security for costs, to find that those circumstances exist: 798839 Ontario Ltd. v. Platt, [2014] O.J. No. 6077 (Ont. C.A.), para 37; Wu v. Zhong, 2020 ONSC 7763 (Div. Ct.), para 37.

[33] Under r. 56.04, “the amount and form of security and the time for paying into court or otherwise giving the required security shall be determined by the court.” Further, under r. 56.05, a party against whom an order for security for costs has been made “may not, until the security has been given, take any steps in the proceeding except an appeal from the order, unless the court orders otherwise”.

[34] Here, Kaur relies on r. 56.01(1)(c), (d) and (e).

[35] In Coastline Corporation Ltd. v. Canaccord Capital Corporation, para 7, Master Glustein (as he then was), comprehensively set out the applicable legal principles for the determination of security for costs as follows:

[7] I apply the following legal principles:

(i) 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 (Hallum v. Canadian Memorial Chiropractic College, 70 O.R. (2d) 119 (H.C.J.) at 123);

(ii) 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” (Uribe v. Sanchez, (2006), 33 C.P.C. (6th) 94 (Ont. S.C.J. – Mast), para 4);

(iii) 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 (Chachula v. Baillie, para 12; Uribe, at para. 4);

(iv) The plaintiff can rebut the onus by demonstrating that:

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

(b) the plaintiff is impecunious and that justice demands that the plaintiff be permitted to continue with the action, i.e. an impecunious plaintiff will generally avoid paying security for costs if the plaintiff can establish that the claim is not “plainly devoid of merit”, or

(c) 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.

(See Willets v. Colalillo, [2007] O.J. No. 4623 (S.C.J. – Mast.), paras 46, 47, 55; Uribe, at para. 5; Zeitoun v. Economical Insurance Group, para 50; Bruno Appliance and Furniture Inc. v. Cassels Brock & Blackwell LLP, [2007] O.J. No. 4096 (S.C.J. – Mast.), para 35);

(v) Merits have a role in any application under Rule 56.01, but in a continuum with Rule 56.01(1)(a) at the low end (Padnos v. Luminart Inc., para 4; Bruno, at para. 36);

(vi) The court on a security for costs motion is not required to embark on an analysis such as in a motion for summary judgment. The analysis is primarily on the pleadings with recourse to evidence filed on the motion, and in appropriate cases, to selective references to excerpts of the examination for discovery where it is available (Padnos, at para. 7; Bruno, at para. 37);

(vii) “If the case is complex or turns on credibility, it is generally not appropriate to make an assessment of the merits at the interlocutory stage. The assessment of the merits should be decisive only where (a) the merits may be properly assessed on an interlocutory application; and (b) success or failure appears obvious” (Wall v. Horn Abbott Ltd., para 83);

(viii) The evidentiary threshold for impecuniosity is high, and “bald statements unsupported by detail” are not sufficient. The threshold can only be reached by “tendering complete and accurate disclosure of the plaintiff’s income, assets, expenses, liabilities and borrowing ability, with full supporting documentation for each category where available or an explanation where not available” (Uribe, at para. 12; Shuter v. Toronto Dominion Bank, para 76);

(ix) To meet the onus to establish impecuniosity, “at the very least, this would require an individual plaintiff to submit his most recent tax return, complete banking records and records attesting to income and expenses” (Shuter, at para. 76);

(x) A corporate plaintiff who claims impecuniosity must demonstrate that it cannot raise security for costs from its shareholders and associates, i.e. it must demonstrate that its principals do not have sufficient assets (Smith Bus Lines Ltd. v. Bank of Montreal, 61 O.R. (2d) 688 (H.C.J.) at 705). Evidence as to the “personal means” of the principals of the corporation is required to meet this onus (Treasure Traders International Co. v. Canadian Diamond Traders Inc., [2006] O.J. No. 1866 (S.C.J.), paras 8-11). A corporate plaintiff must provide “substantial evidence about the ability of its shareholders or others with an interest in the litigation to post security”. “A bare assertion that no funds are available” will not suffice. (1493677 Ontario Ltd. v. Crain, [2008] O.J. No. 3236 (S.C.J. – Mast.), para 19);

(xi) Consequently, full financial disclosure requires the plaintiff to establish 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 (Morton v. Canada, para 32);

(xii) Because the plaintiff has the onus to establish impecuniosity, a defendant “can choose not to cross-examine if the plaintiff fails to lead sufficient evidence”. The decision not to cross-examine does not convert insufficient evidence into sufficient evidence (Bruno, at pars. 27-28; Shuter, at paras. 59 and 71); and

(xiii) When an action is in its early stages, an installment (also known as “pay-as-you-go”) order for security for costs is usually the most appropriate (Bruno, at para. 65; Hawaiian Airlines, Inc. v. Chartermasters Inc., et al. (1985), 50 O.R. (2d) 575 (S.C.O. – Mast.)).

[36] In Yaiguaje v. Chevron Corp., 2017 ONCA 827, paras 23–25, the Court of Appeal for Ontario summarized the factors to be considered in a motion for security for costs. It concluded that the court must consider the issue of the justice of such an order holistically.

Issues

[37] The issues raised in this motion are:

1. Has Kaur satisfied her onus by proving that any of the following appear to be the case:
   • a. Dawson has a costs order against him in this or another proceeding that remains unpaid; or
   • b. Dawson is a nominal applicant and there is good reason to believe that he lacks sufficient assets in Ontario to pay the costs of Kaur; or
   • c. There is good reason to believe that this application is frivolous and vexatious and that Dawson lacks sufficient assets in Ontario to pay the costs of Kaur?
2. If Kaur’s onus has been satisfied, should the court nonetheless exercise its discretion to refrain from ordering security for costs, looking at the justice of the issue holistically?

Issue No. 1: Has Kaur satisfied her onus by proving that any of the following appear to be the case?

a. Does Dawson appear to have a costs order against him in this or another proceeding that remains unpaid?

[38] In Parravano v. St. Paul Fire and Marine Insurance, 2023 ONSC 3480, para 46, A.J. Graham summarized the basis of this ground to award security for costs.

[39] There is no dispute that Dawson has failed to pay the three costs awards against him. Two are in this proceeding: the $7,856.70 plus HST (which totals $8,878.07) ordered by Mills J. on July 16, 2024 and the $750 that I ordered him to pay on October 24, 2024. In addition there is the $750 that he was ordered by the Court of Appeal to pay when he abandoned his appeal of the Mills J. order. The total of costs awarded against Dawson is $10,378.07.

[40] As set out above, there is no dispute that Dawson has not paid a cent towards those awards. Further, Dawson has offered no explanation for his failure to pay the awards.

[41] Thus, this ground is met.

b. Does Dawson appear to be a nominal applicant and is there good reason to believe that he lacks sufficient assets in Ontario to pay the costs of Kaur?

[42] In order to succeed under this ground, Kaur must prove both prongs of the test, that: 1) Dawson appears to be a nominal applicant and 2) he appears to lack the assets in Ontario to pay the costs that may be awarded in favour of Kaur: 798839 Ontario Ltd., at para. 36.

Nominal Applicant

[43] In Musitano v. Gordon, 2023 ONSC 5587, para 37, Bordin J. defined the term, “nominal plaintiff”, for the purposes of r. 56.01.

[44] Kaur offers the six following reasons to say that it at least appears that Dawson is a nominal applicant, acting to protect Salman’s interest in the Property:

1. Salman has been on title to the Property for over twelve years, since January 31, 2012, without change. No explanation has been offered for the persistence of title in Salman’s name except her full ownership of the Property.
2. Dawson only came forward to claim equitable title to the Property after the Sheriff’s sale process commenced.
3. Salman alone granted three different mortgages on the Property and one Notice of Assignment of Rents.
4. Dawson and Salman were common law partners for a number of years. They shared the same lawyer, who represented Salman in Kaur’s action against her and then represented Dawson in this application. That lawyer is now off the record.
5. Dawson’s conduct appears to be intended to obstruct the sheriff’s sale of the Property. Kaur points to the timing of Dawson coming forward to claim equitable title to the Property, his bootless attempt to appeal the Mills J. order and Dawson’s months-long delay in serving his application record. He only served it on Kaur’s lawyers about two weeks before the application was scheduled to be heard. This essentially forced Kaur to request an adjournment of the hearing of the application. The adjournment was granted, but only after she consented to a term of the adjournment which delayed the sheriff’s sale until after the application was heard. Kaur had to agree to this term despite the fact that Mills J. refused that same relief on May 30, 2024.
6. Mills J. demonstrated skepticism of Dawson’s claims in her costs decision of July 16, 2024. She declined to order that the costs of Dawson’s unsuccessful stay motion before her be a charge against the Property. She reasoned that if Dawson is unsuccessful in this application, Salman will remain the beneficial and legal owner of the Property. In that event, Salman, who did not take a position in the motion before Mills J., should not be forced to absorb Dawson’s costs liability to Kaur in that motion.

[45] On the other hand, Dawson relies on evidence found in his second affidavit, cited above, to support his position. That evidence includes the purported handwritten trust agreement, his signature as landlord on the August 12, 2023 lease of the Property and Salman’s 2014 questionnaire to CRA. Further Salman, the legal owner of the Property, supports Dawson’s position.

[46] In considering all of the above, I find that there is good reason to find that Dawson appears to be a nominal applicant for the six reasons cited by Kaur above. Even with the evidence that Dawson has produced, there are two reasons to question his credibility.

[47] First is the fact that his explanation for allegedly placing the Property in Salman’s name changed in the 3 ½ month interval between his two affidavits. During that time, Mills J. relied on Dawson’s first affidavit to find that he failed to come to court with clean hands. The second affidavit did not rely on the ground which Mills J. strongly criticized.

[48] Second is the fact that Dawson deliberately suppressed evidence regarding his alleged ownership of the Property from his ex-wife in their family law proceedings. During the course of those proceedings, he had a duty to disclose any interest, whether legal or equitable, in the Property: see r. 13(1) of the Family Law Rules, O. Reg 114/99, as am. and Forms 13.1 and 13A under those rules. He also had a duty to disclose to his former wife and the court any rental income he received from the Property as well as any debts incurred in purchasing it. His withholding of that information can be seen as dishonest conduct, which must be considered in any determination of his credibility.

Dawson lacks sufficient assets in Ontario to pay the costs of Kaur

[49] As Lang J.A. of the Court of Appeal pointed out in City Commercial Realty Services (Canada) Ltd. v. Bakich, [2005] O.J. No. 6443 (Ont. C.A.), para 7:

7 Under rule 56.01(1)(d), the moving party is not required to establish that a corporation has insufficient assets to pay costs, but only to establish that there is good reason to believe that the corporation has insufficient assets to pay the costs. As Philp J. noted in 737071 Ontario Inc. v. Min-A-Mart Ltd., [1996] O.J. No. 1173 (Ont. Gen. Div.), para 5: "This lighter onus is based on the belief that it would be unfair to insist that the defendant prove something that is within the knowledge of the plaintiff."

The same reasoning applies to a non-corporate defendant.

[50] In his oral submissions, Dawson alleged that he has sufficient assets in Ontario to meet any costs award that Kaur may obtain. Dawson points first to the Property and its alleged value as being sufficient to meet any costs award against him. But that is a “heads I win, tails you lose” argument. In order to succeed in that argument, Dawson must win this case and obtain a declaration that he is the equitable owner of the Property. But in that event, the availability of the Property to meet a costs award will likely be moot since costs would likely not be awarded against the winning party.

[51] Rather, the Property need only be available to cover Dawson’s costs if he loses the case. In that case, the court will have found that he is not the equitable owner of the Property and thus it is not exigible to meet his costs obligation to Kaur. That is the thrust of Mills J.’s reasoning in refusing to make her costs award a charge against the Property. I adopt her reasoning.

[52] I add that, in any event, Dawson (and Salman) have failed to offer any evidence of the net value of the Property.

[53] Dawson also asked me to look at the photos of his vehicles, which are attached as exhibits to his second affidavit. He contends that their value is sufficient to meet any costs award against him. But for the four reasons that follow, those photos prove nothing. First, they do not prove Dawson’s ownership of whatever vehicles are depicted in the photographs. Second, most of the photos in question show vehicles that have been covered by sheets or some form of automotive covering. Even the make and model of most vehicles is not visible from the photos. Third, and in a related point, Dawson’s affidavit fails to itemize the vehicles. Fourth, Dawson fails to offer any proof of the net value of the vehicles.

[54] More importantly, Kaur’s lawyer wrote to Dawson to request that he provide evidence of his assets in Ontario so that it can be determined whether they are sufficient to meet a costs award. While that evidence was within his power to produce, Dawson refused.

[55] As McDermott J. pointed out in Langleigh Estates Inc. v. Rose Corp., 2010 ONSC 7148, para 17, there is no obligation to grant any request from the other side to provide a statement of their assets and liabilities. But in the circumstances of a motion for security for costs, a failure to do so can raise an adverse inference to be raised against the party claiming to have sufficient assets to meet a costs award. See also: 737071 Ontario Inc. v. Min-A-Mart Ltd., [1996] O.J. No. 1173 (Ont. Gen. Div.), para 11; 1338086 Ontario Ltd. v. Apostolou, para 11 and Parravano, at para 38.

[56] I may also consider Dawson’s failure to pay the three costs awards as evidence of a lack of assets to pay a costs award: Parravano, at para. 38.

[57] In considering all of the factors set out above, I find that Dawson lacks sufficient assets in Ontario to pay the costs that may be awarded to Kaur in this proceeding.

Conclusion re r. 56.01(d)

[58] Thus, the grounds set out in r. 56.01(d), that Dawson appears to be a nominal applicant and that he lacks assets in Ontario to pay Kaur’s costs of this application, are met.

c. Does it appear that this application is frivolous and vexatious and that Dawson lacks sufficient assets in Ontario to pay the costs of Kaur?

Frivolous and Vexatious

[59] In 798839 Ontario Ltd., Lang J.A. reviewed the definition of “frivolous and vexatious” within the context of an appeal at paras. 38-39.

[60] Those factors apply to the question of whether an application is frivolous and vexatious.

[61] Here, the factors which apply to the issue of whether Dawson is a nominal applicant apply equally to the issue of whether this proceeding is frivolous and vexatious. However an added factor applies as well. Even if Dawson intended at the time that the Property was purchased, that Salman hold it in trust for him, there is good reason to believe that she did so in order to shield the Property from Dawson’s potential creditor; i.e. his former wife.

[62] Courts are generally loath to assist parties who attempt to use them to further fraudulent schemes. As Charney J. wrote in Khan v. Taji, 2020 ONSC 6704, para 94:

Courts have consistently taken a hostile view of parties who attempt to enlist the court in support of their fraudulent schemes, based on the "principle that the court will not assist a suiter to obtain relief from the consequence of his own unlawful act": Krys v. Krys, [1929] SCR 153, at p. 164.

[63] Charney J. further pointed to the history of this principle in Canadian common law, going back to what he described as the “seminal” 1916 decision of the Supreme Court of Canada decision in Scheuerman v. Scheuerman (1916), 52 S.C.R. 625.

[64] Each of the five judges of the Supreme Court offered their own reasons, with only Anglin J. dissenting. The reasoning of the majority was reflected in the decision of Sir Charles Fitzpatrick C.J.C. While he was open to finding a resulting trust in favour of the wife, he added at pp. 626-628 that he would not enforce it because of the “unlawful intentions" of the husband.

[65] Similarly, Duff J. wrote, at p. 632:

The respondent's case, therefore, rests upon a transaction which if it had in fact the effect contemplated, namely, of delaying or hindering the creditor, would undoubtedly be a transfer void under the Statute of Elizabeth at the instance of the creditor; and in that case the respondent must obviously fail on the principle that a plaintiff cannot recover who is obliged to make out his case through the medium and by the aid of an illegal transaction to which he was himself a party. Taylor v. Chester [(1869) L.R. 4 Q.B. 309, at p. 314].

[66] Anglin J. dissented on the basis that the intent of the transaction may have been fraudulent, but its execution was not. He relied on particulars of Alberta law at the time, which limited the exigibility of the lands at the time of sale because their value fell below a certain minimum level for execution. But Anglin J. did not question the general principle adopted by the majority.

[67] In Tinker v. Tinker, [1970] 1 All E.R. 540 (U.K. C.A.), at p. 542, Lord Denning M.R. of the U.K. Court of Appeal made clear that a transferor cannot have it both ways. He cannot argue that the transfer is full and valid as against his creditors but that he nonetheless continues to hold an equitable interest in the transferred property.

[68] That quote was adopted by many Canadian courts, including the Ontario Court of Appeal in Maysels v. Maysels, p. 347 and the British Columbia Court of Appeal in V.J.F. v. S.K.W., 2016 BCCA 186, para 52.

[69] In Bernard v. Weiss, [1986] B.C.J. No. 3121 (B.C. S.C.), para 22, a case with similarities to this one, a husband transferred his joint half interest in their home to his wife, in order to secure it from his potential business creditors. He did so as he was about to open a new business. She later sold the home and entered, but then resiled from an agreement to purchase another property. When the wife was successfully sued on the aborted transaction, the husband took the position that he was actually the equitable titleholder of the first home. Thus, the proceeds of its sale could not be seized to pay his wife’s debt from the aborted transaction. Wallace J. of the British Columbia Supreme Court rejected the husband’s argument.

[70] In light of the above, there is at least a good reason to believe that a court will reject Dawson’s argument that he holds equitable title to the Property in light of his intention to shield it and information about it from his ex-wife in his matrimonial proceedings. Thus, it appears that this application is frivolous and vexatious.

Conclusion re r. 56.01(e)

[71] It is not necessary to consider again the issue of whether Dawson has sufficient assets to pay Kaur’s costs. That issue has been decided, above.

[72] Thus, the grounds set out in r. 56.01(e) are met.

Issue No. 2: If Kaur’s onus has been satisfied, should the court nonetheless exercise its discretion to refrain from ordering security for costs, looking at the justice of the issue holistically?

[73] Despite my findings above, Dawson has not proven that he is impecunious, only that he has failed to pay three costs awards, refuses to divulge his finances, but claims he has sufficient assets to meet a judgment that Kaur may obtain. None of those factors assist him at this stage.

[74] I am entitled to consider the merits at this stage, but not at an in-depth level. My analysis is not meant to be a determination of the merits of this action. That must be left to the judge hearing the application.

[75] That being said, Dawson appears to have a tenuous claim to an equitable title of the Property. His case is hampered by both a lack of direct evidence of his financial contributions to the purchase price and his original claim that he placed the Property in Salman’s hands to shield it from his ex-wife in their matrimonial litigation. As set out above, the court hearing his application may be reluctant to assist him in also shielding the property from Salman’s credit, Kaur.

[76] In coming to my determination, I also consider the timing of this application. It was issued just as Kaur was about to enforce her judgment against Salman, some twelve-plus years after the Property was purchased in her sole name.

[77] In looking at the justice of this case, I see no reason to avoid an order for security for costs. I recognize that the remedy is not one to be granted readily. But this is a case where the test for security for costs is met three ways and the reasons to refuse it are far from robust. In sum, I do not see sufficient reason to refuse such an order.

Quantum of Security for Costs

[78] In Morton v. Canada (Attorney General), para 42, Quinn J. wrote that the wide discretionary ambit to determine the quantum of costs under r. 56.04 should not restrain the court, absent exceptional circumstances, from ordering the necessary quantum. The court should not, in his words, “become weak-kneed at that prospect.” But when litigation “is in its procedural infancy, with examinations for discovery yet to be scheduled, a pay-as-you-go order is usually the most appropriate one …”

[79] Here, Kaur seeks her anticipated costs of $46,676.71 inclusive of HST and disbursements. That amount represents the anticipated partial indemnity costs of the entire proceedings, including:

1. Two attendances at triage court;
2. Review of application record, any further materials and Dawson’s family law file;
3. Preparation of responding materials;
4. Preparation and attendance for cross-examinations of Kaur and Dawson;
5. Preparation and attendance at cross-examination of additional witnesses per r. 39.09, including Salman’s daughter, Salman’s conveyancing lawyer and an individual who swore an affidavit in support of Dawson;
6. Answering and reviewing answers to undertakings, advisements and refusals;
7. Drafting a factum and compendium; and
8. Attending at hearing of application.

[80] In reviewing the anticipated bills of costs, while I see some overlap between junior and senior counsel, that is to be expected when there is an allocation of resources. I do not find that the anticipated bill of costs is overinflated. However, it does anticipate some steps that may not take place (such as cross-examination of third parties). On the other hand, it may be necessary to bring motions on undertakings, advisements and refusals.

[81] Nonetheless, the parties are still early in the procedural stages of this case. All that has taken place is series of motions regarding a stay or postponement of the sheriff’s sale and security for costs. While counsel for Kaur argues that all of the remaining steps will occur quickly and thus the full amount should be paid in advance, I am less sure.

[82] The anticipated bill of costs adds up to approximately $30,000 inclusive only of the steps leading to the drafting of a factum and compendium, preparation for and attendance at examinations as well as undertakings/refusals, disbursements and HST. I order that amount to be paid within 30 days.

[83] Kaur has leave to return before me to seek further security for costs once all examinations, undertakings and attendant motions are completed.

Costs

[84] As the successful party, Kaur is presumptively entitled to the costs of this motion.

[85] The parties should attempt to resolve the issue of costs on their own. If they are unable to do so, the Kaur may submit her costs submissions of up to three pages, double-spaced, one-inch margins, plus a bill of costs/costs outline and offers to settle within 14 days of release of this endorsement. They need not include the authorities upon which she relies, so long as they are found in the commonly referenced reporting services (i.e., LexisNexis Quicklaw, or WestlawNext) and the relevant paragraph references are included. Dawson and Salman (if costs are requested against her as well) may respond in kind within a further 14 days. No reply submission will be accepted unless I request it. If I have not received any submissions within the time frames set out above, I will assume that the parties have resolved the issue and will make no costs order.

Date: January 6, 2025

[1] The affidavit is undated but the exhibits are dated May 16, 2024.

[2] Muckleston v. Brown (1801), 6 Ves. 52, at p. 68, where a person sought to reverse their own fraudulent trust to defeat a statutory provision.