Date: 20080704
Docket: T-776-07
Citation: 2008FC837
Toronto, Ontario,
July 4, 2008
PRESENT: Kevin R. Aalto, Esquire, Prothonotary
BETWEEN:
HAROLD
COOMBS
Plaintiff
and
HER MAJESTY THE QUEEN
Defendant
REASONS FOR ORDER AND ORDER
[1]
At the
conclusion of the argument of the motion, after hearing the submissions of
counsel for the Respondent and from Mr. Coombs, a self-represented litigant, I
gave oral reasons for decision reserving the right to correct and amend the
reasons. These are the final edited version of those reasons.
[2]
This is a motion brought by the Defendant, Her Majesty
the Queen, for security for costs in the amount of $43,410. There are several
enumerated grounds in support of the Respondent’s request for security for
costs set out in the Motion Record in paragraphs 1 through 4 as follows:
1. The Canada Revenue Agency (CRA) is investigating the
plaintiff for offences under The Income Tax Act, R.S.C. 1985, c. 1 (5th
Supp.) (“the Act”) for evading the payment of payroll taxes on behalf of Sun-Air
Travel Inc. and for making false or deceptive statements in several tax
returns;
2. The CRA searched 23 locations,
including the plaintiff’s personal residence, business addresses, and at the
residences of family members and business associates. The matters being
investigated include donations to Rocky Ridge, a charity for which the
plaintiff acts as accountant, various claims for allowable business investment
losses and other matters. The statement of claim alleges inter alia
that various officials of the CRA acted in concert to devise a scheme to
intimidate ands cause the plaintiff and his family harm;
3. The plaintiff has brought seven
applications and two actions since February 8, 2007, contesting the CRA’s
audits of the donors to the charity and its investigating under the Act. The
defendant has successfully struck the applications on the grounds of timeliness
or lack of the Court’s jurisdiction to hear them. The defendant also brought a
motion to strike the statement of claim in the within action. The claim was
subsequently amended;
4. The plaintiff owes court costs of
$4,750.00 as a result of the orders dismissing the applications, $2,250.00 of
which came in three proceedings where the Court directed that the costs are
payable forthwith. A further Bill of Costs with respect to a discontinued
action in outstanding in the amount of $987.92. None of the Orders for costs
have been satisfied.
[3]
In response, Mr. Coombs filed an affidavit
in which he makes the bald statement that he is impecunious. For that reason he
relies upon Rule 417 to resist the payment of security for costs. Rule 417 provides
as follows:
417. The Court may refuse to order that
security for costs be given under any of paragraphs 416(1) (a) to (g) if a
plaintiff demonstrates impecuniosity and the Court is of the opinion that the
case has merit.
[4]
Rule 417 remains discretionary and requires
the Court to balance a number of factors, including the strength of the
evidence before the Court.
[5]
The Court has grappled with the issue of impecuniosity
in the past. Indeed, there is a long line of authority that deals with the
meaning of impecuniosity. The Court has been referred to Heli Tech Services
(Canada) Limited v. Weyerhaeuser Co., 2006 FCJ 1494, a decision of
Justice Campbell of this Court. That was a case in which an appeal from a Prothonotary
was taken who granted security for costs in the face of a bald statement from
the Plaintiffs that they were impecunious. One of the Plaintiffs was an
individual.
[6]
In Heli
Tech, Justice Campbell reviews at some length the meaning of impecuniosity,
and makes the following observation:
[5] A line of authority places a
heavy onus of proof on any party seeking to avoid posting security for costs on
the basis of impecuniosity.
[7]
Justice
Campbell then goes on to review a number of other cases dealing with
impecuniosity. One of the cases is Smith Bus Lines Limited v. Bank of
Montreal, (1987) 61 O.R. (2d) 688, at 704-705 and, in particular, the
following passage:
The corporate plaintiff wishing to be allowed
to proceed with its action, without either showing sufficient assets or putting
up security, must first show “impecuniosity” meaning not only that it does not
have sufficient assets itself but also that it cannot raise the security for
costs from its shareholders and associates, partly because the courts do not
want a successful defendant to be effectively deprived of costs where, for
example, wealthy shareholders have decided to carry on business and litigation
through a shell corporation. To go the impecuniosity route the plaintiff must
establish by evidence that it cannot raise security for costs because, if a
private company, its shareholders have not sufficient assets. As expressed by
Reid J. in John Wink Limited v. Sico Inc., (1987) 57 O.R. (2d) 705 at
page 709: “If an order for security stops the plaintiff in its tracks it has
disposed of the suit.” To raise impecuniosity there must be evidence that if
security is required, the suit will be stopped because the amount of the
security is not only not possessed by the plaintiff but is not available to it.
[8]
After this
analysis, Justice Campbell reaches the following conclusion:
As to the evidence required to prove
impecuniosity, a high standard is expected. Frank and full disclosure is
required. That is, the onus must be discharged with “robust particularity”, so
that there can be no unanswered material questions.
[9]
In support
of that conclusion, Justice Campbell also refers to Morton v. Canada,
(Attorney General), (2005), 75 O.R. (3d) 63 (S.C.J.) at paragraph 32 and a
decision of the House of Lords, M.V. Yorke Motors (a firm) v. Edwards, [1982]
1 WLR 444, wherein
Lord Diplock approved the following remarks:
The fact that the man has no capital of
his own does not mean that he cannot raise any capital. He may have friends,
he may have business associates, he may relatives, all of whom can help him in
his hour of need.
[10]
Taking
into consideration the evidence before the Court and the affidavit of Mr.
Coombs, and particularly being cognizant of the fact that Mr. Coombs on prior
occasions in this Court has brought proceedings in which orders for costs have
been made against him which have not been paid, Mr. Coombs ought not in this
case, without full, frank and "robust particularity" demonstrate the
impecuniosity which he alleges and which he relies upon to have the Court exercise
its discretion in Rule 417 to deny the Plaintiff its security for costs.
[11]
In the
circumstances of this case, after having carefully reviewed Mr. Coombs’
affidavit and heard his submissions, I am not satisfied based on these
authorities that impecuniosity has been made out with robust particularity. The
affidavit merely states that Mr. Coombs is impecunious and that he has no
source of income other than his Canada Pension and Old Age Security Pension and
that he has debts to the Revenue Canada Agency which he is paying back in small
increments. He does not attach exhibits showing his bank balances, nor any
other financial data. He states his wife provides him with various amenities
of life without advising the Court of whether he can raise funds either from
his wife or other relatives in order to pursue this litigation. Thus, an order
for security for costs is entirely appropriate in this case.
[12]
The
defendant's bill of costs seeks $43,410. It is divided into two stages, a
pre-trial stage and a post-trial stage. The pre-trial stage comprises an
amount of $11,990, which I understand from Mr. Parke should be increased to
$12,070, to include a further amount for pre-trial, as I understand it.
[13]
Mr. Coombs
takes issue with the 21 hours for attending on examination for discovery in
this case, which is calculated at $240 an hour, at $5,040.
[14]
In all of
the circumstances, it is my view that security for costs for stage one of the
proceeding should be payable. The 21 hours for examination for discovery is
somewhat high and having reviewed the Statement of Claim in this case, I would
reduce that amount by a small percentage.
[15]
Thus, an
appropriate award security for costs for the first stage of these proceedings, to
the end of discoveries, is $10,000. The Defendant is free to seek a further
payment of security for costs thereafter.
[16]
Unless and
until those funds are paid into Court for security for costs of the defendant
in this proceeding, the action would otherwise remain stayed in accordance with
the Federal Courts Rules.
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