Date: 19980227
Docket: T-2745-97
BETWEEN:
MIRAJ S.A. and JORDACHE MANAGEMENT AND DEVELOPMENT CORP.
Plaintiffs
- and -
GEROVITAL, INC. FRANCOIS VAUTOUR and
ROGERS BROADCASTING LIMITED
Defendants
REASONS FOR ORDER
ROTHSTEIN, J.:
[1] This is an appeal from an order of Giles, A.S.P. dated February 2nd, 1998 refusing an application by the defendants Gerovital, Inc. and François Vautour (the "defendants") for security for costs. The plaintiff, Miraj S.A. ("Miraj") is a Romanian corporation. The plaintiff, Jordache Management and Development Corp. ("Jordache Corp.") is an Ontario corporation.
[2] The order of Giles, A.S.P. states:
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Based on the reasons in Titan Linkabit this motion is dismissed as there is a plaintiff in Canada. |
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In Titan Linkabit v. S.E.E. See Electronic Engineering Inc. (1992), 53 F.T.R. 309; 42 C.P.R. (3d) 48, a case involving both foreign plaintiffs and a plaintiff under the jurisdiction of the Court, the plaintiffs had paid $20,000 into Court as security for damages in relation to an Anton Piller order. This appears to have had some bearing on the decision not to award security for costs against the foreign plaintiffs.
[3] Because of the particular circumstances in that case, defendants' counsel submitted that Titan Linkabit is not a precedent of general application in cases in which there are plaintiffs both within and outside the jurisdiction of the Court. In addition, defendants' counsel says that Jordache Corp. in this case is a nominal plaintiff and that this point was not dealt with by Giles, A.S.P.
[4] While I am not satisfied that Titan Linkabit is inapplicable here, it is correct that the status of Jordache Corp. is not mentioned in the order of Giles, A.S.P. For this reason I proceed to exercise my discretion de novo on this appeal.1
[5] The relevant Federal Court Rule2 is 446(1)(a) and (b):
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446. (1) Where, on an application of a defendant, it appears to the Court |
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(a) that the plaintiff is ordinarily resident out of the jurisdiction, |
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(b) that the plaintiff (not being a plaintiff who is suing in a representative capacity) is a nominal plaintiff who is suing for the benefit of some other person and that there is reason to believe that he will be unable to pay the costs of the defendant if ordered to do so, |
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if, having regard to all the circumstances of the case, it seems just to do so, the Court may order the plaintiff to give such security for the defendant's costs of the action or other proceeding as seems just. |
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[6] There is no question that Miraj is a foreign plaintiff. However, the general rule derived from the jurisprudence is that, when there are both foreign and domestic plaintiffs, security for costs will not normally be ordered against the foreign plaintiffs. See, for example, Titan Linkabit v. S.E.E. SEE Electronic Engineering, (supra), K-tel International Ltd. et al. v. Benoît et al., (1995), 92 F.T.R. 157, Figgie International Inc. v. Schoettler (1994), 53 C.P.R. (3rd) 450 (F.C.T.D.). The rather unusual opposite conclusion was reached in Windsurfing International Inc. v. The AIROS Systems Ltd. (1979), 46 C.P.R. (2nd) 43 (F.C.T.D.) per Cattanach J., and Hassenfeld Bros. Inc. v. Parkdale Novelty Co. Ltd., [1967] 1 Ex.C.R. 277 per Noël, J.
[7] The reason why security for costs is not generally allowed when there are plaintiffs both within and outside the jurisdiction of the Court is that the plaintiffs within the jurisdiction are, to all intents and purposes, the defendants' security for costs. There is no reason why defendants in cases where there are plaintiffs both outside and within the Court's jurisdiction should be entitled to security for costs when they would not be entitled to such security when the plaintiffs are all within the jurisdiction of the Court. However, security for costs has been ordered where there are foreign and domestic plaintiffs where the claims of the different plaintiffs are not "joint claims" (see Hassenfeld, (supra) at p. 283). As I understand the approach in Hassenfeld, if claims of foreign and domestic plaintiffs arise under different causes of action or are otherwise so different that the defendants may not be able to look to the domestic plaintiffs for costs ordered against the foreign plaintiffs, an order for security for costs could be made. However, I think the onus would be on the defendants to show that such a divergence of result between plaintiffs outside and within the jurisdiction could arise and that the plaintiffs within the jurisdiction could therefore not be resorted to to satisfy an order for costs in favour of the defendants. The defendants have not done so here. I see no reason why the general rule should not operate in this case. The existence of a Canadian plaintiff is, barring application of Rule 446(1)(b), sufficient to justify refusing an order for security for costs against Miraj.
[8] The defendants' case, therefore, must be based on Jordache Corp. being a nominal plaintiff and that there is reason to believe it will be unable to pay costs if ordered to do so. Both requirements must be satisfied. The defendants fail on both grounds. The affidavit evidence of Michael Jordache, the President of Jordache Corp., is that Jordache Corp. was incorporated in 1989 and carries out various businesses such as property management, importing and exporting, management services, construction and renovations. It is the signatory of a distributorship and licensing agreement with the plaintiff Miraj for the import, distribution and sale of Miraj's cosmetics and other products. Mr. Jordache says that Jordache Corp. has a real interest in the action. Due to the infringing activity of defendants, he says it has been very difficult for Jordache Corp. to take the benefit of the distributorship and licensing agreement with Miraj. The defendants did not cross-examine on this affidavit. I am satisfied that for purposes of this appeal, Jordache Corp. cannot be considered to be a nominal plaintiff for Miraj.
[9] Michael Jordache further avers that Jordache has two bank accounts, has the regular services of an accountant, has legal counsel and carries on all the regular activities of a business corporation. He says that the financial position of Jordache Corp. is "solid", but for reasons of confidentiality he does not wish to provide financial information regarding the company. I reiterate there was no cross-examination on this affidavit.
[10] The wording of paragraph 446(1)(b) indicates that at least initially, the onus is on the defendants to demonstrate that there is reason to believe that Jordache Corp. will be unable to pay the costs of the defendants. Placing the onus on the defendants recognizes that plaintiffs under the jurisdiction of the Court do not normally have to provide security for costs.
[11] The defendants say they have conducted searches of records relating to Jordache Corp. and have ascertained that Michael Jordache is the only director and officer of the corporation. They allege that the registered business addressed of Jordache Corp. is the same as Mr. Jordache's residence (although this is denied in the affidavit of Michael Jordache). Equifax/Creditel, a credit agency, indicated they had no record of Jordache Corp. None of this is evidence that Jordache Corp. would be unable to pay costs. There is nothing to be inferred from the fact that Mr. Jordache is the sole director and officer of the company, or that the registered address of the corporation may be the residence of Mr. Jordache. The fact that Equifax/Creditel has no record of Jordache may be simply be consistent with Jordache Corp. not having to borrow money.
[12] It would have been much more direct and relevant for the defendants to have cross-examined Mr. Jordache on his affidavit to obtain specifics of the assets, liabilities, revenues and expenses of Jordache Corp. over recent years. If Mr. Jordache refused to provide that information on cross-examination, that may well have constituted a reason to believe that Jordache Corp. may not be able to pay costs, but there was no such cross-examination. No adverse inference can be drawn from Mr. Jordache's initial reluctance to publicize financial information with regard to his corporation.
[13] Having regard to all the circumstances of this case, I do not think it would be just to order security for the defendants' costs. The appeal is dismissed with costs to the plaintiffs in any event of the cause.
"Marshall E. Rothstein"
Judge
Toronto, Ontario
February 27, 1998
FEDERAL COURT OF CANADA
Names of Counsel and Solicitors of Record
DOCKET: T-2745-97
| STYLE OF CAUSE: MIRAJ S.A. and JORDACHE |
| MANAGEMENT AND DEVELOPMENT |
- and -
| GEROVITAL, INC., FRANCOIS |
DATE OF HEARING: FEBRUARY 23, 1998
PLACE OF HEARING: TORONTO, ONTARIO
| REASONS FOR ORDER BY: ROTHSTEIN, J. |
DATED: FEBRUARY 27, 1998
APPEARANCES:
Mr. Gerald Matlofsky
For the Plaintiffs
Mr. Kenneth McKay
For the Defendants
-2-
| SOLICITORS OF RECORD: Mr. Gerald Matlofsky |
Barrister and Solicitor
460 Roselawn Avenue
Toronto, Ontario
M5N 1J8
For the Plaintiffs
Mr. Kenneth D. McKay
Sim, Hughes, Ashton & McKay
6th Floor
330 University Avenue
Toronto, Ontario
M5G 1R7
For the Defendants
Mr. Doug Wilson
Lang, Michener
Barristers and Solicitors
BCE Place
181 Bay Street
Suite 2500
Toronto, Ontario
M5J 2T7
For the Defendant
(Rogers Broadcasting Limited)
FEDERAL COURT OF CANADA
Date: 19980227
Docket: T-2745-97
BETWEEN:
| MIRAJ S.A. and JORDACHE MANAGEMENT AND DEVELOPMENT CORP. |
Plaintiffs
- and -
| GEROVITAL, INC. FRANCOIS VAUTOUR and ROGERS BROADCASTING LIMITED |
Defendants
REASONS FOR ORDER
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1 See Canada v. Aqua-Gem Investment Ltd., [1993] 2 F.C. 425 at 462-463 per MacGuigan J.A.
2 C.R.C. 1987, c. 663, as amended.
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