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FACSIMILE TRANSMISSION COVER SHEET Office of Master Abrams Assistant Trial Coordinator: Mr. Conrad Diamante Judicial Secretary: Ms. Rita Nielsen Court House 393 University Avenue 6`s Floor Toronto, ON MSG lE6 DATE: December 12/13 Superior Court of Ontario'' Toronto Region Masters' Chambers Chambres des Protonotaires Cour sup8rieure de Justice Region de Toronto

TO: G. Mowatt/C, Mihalceano TO: K. Clark/M, Spence TO:

FAX: 416-971-6638 FAX: 416-863-1515 FAX:

PROCEEDING(S) AT ISSUE: Munoz v. Deb COMMENT: Decision of Master Abrams re: October 16 and 29/13 motion: see attached.
NOTE: If there is anyone to whom this fax should have been addressed,: but was not, it is the responsibility of counsellor theslaintiff/.c (or, if the plaintiff is self-represented, counsel for the defendant/s) to forward a copy of this facsimile cover sheet, and all attachments, to the person(s) missed Likewise, contact information, as recorded

-ATTENTION"Phis tacsimile may contain PRIVILEGED and CONFIDENTIAL INFORMATION for the use of the Addressee(s) named above. If you are not the intended recipient of this facsimile or the employee or agent responsible for delivering it to the intended recipient, you are hereby notified that any dissemination or copying of this facsimile is strictly prohibited. If you have received this facsimile in error, please immediately notify us by telephone to arrange for the return or destruction of this document. Thank you. RENSIGNMENTS PRIVILEGIES ET CONFIDENCILS destines exclusivement aux personnes dgnt le nontlest mentionne ci-dessus. Si vous n'etes pas le destinairel de cc document ni ]'employe ou ]'agent responsable de Ile delivrer a son destinaire, vous etes par la presente avis qu'il est strictement interedit de distribuer ou copier cc document. Si celui vous est parvenu par erreur, veuillez noun en aviser immediatement par teldphone pour arranger le retour ou

If you do not receive all the pages, please call (416) 327 -0506 Si vous ne recevez pas toutes les pages, veuillez appeler: (416) 327 -0506 rS.& iNum Derfiiom Dre ae - lelecopieur: (416) Judicial Secretary: 416-327-0506 ATC (Mr. Conrad Diamante): 416-327-9406

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Munoz v. Deb Worldwide Healthcare Inc. Court File No.: 12-CV-453905 Motion Dates: October 16 and 29/13 In attendance; K. Clark/M. Spence, for plaintiff G. Mowatt/C. Mihalceano, for defendant

By the court: [1] As this action has been set down for trial, the defendant requires leave of the court,

pursuant to R. 48.04(1), to bring this motion, [2] When this action was first set down for trial in January 2013, examinations for discovery

had not yet taken place. While the original statement of claim (delivered in May/12) had indicated that Mr. Munoz lived in Quebec, Mr. Munoz's August 28/12 affidavit of documents suggested that Mr. Munoz lived in Ottawa. The defendant sags that its was in March/13, during Mr. Munoz's examination for discovery, that the defendant learned that Mr. Munoz does indeed live in Quebec and, also, that he is without assets in Ontario or Quebec sufficient to defray a costs award. [3] That said, and with a June 17/13 trial date already having been fixed by the court, the

defendant did not give the plaintiff any real indication that it would be l bringing a security for costs motion until May 6/13. At that time, counsel for the defendant wrote ( to plaintiffs counsel to indicate that he intended to bring the motion at the pre-trial conference scheduled for May 17/13. Between the time of the plaintiff's examination for discovery and May 6/13, a fresh step was takenthis action was mediated. [4] The motion was not brought at the pre-trial conference, as suggested. It was brought in

the latter half of October/I3 (with the trial date having been adjourned, after the pre-trial conference, to late January/14). [5] While this motion was anticipated and allowances were made for it by the parties, the

plaintiff has never acknowledged its propriety. He says that leave to bring this motion ought not

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to be granted and, in any event, that the defendant's delay

in bringing this motion ought to be a

complete bar to my granting the defendant the relief that it is seeking; I'm inclined to agree. ) [6] A defendant has an obligation to bring a motion for security for costs promptly in an

effort to minimize prejudice to the plaintiff and prevent the plaintiff from having to post security after already incurring significant legal expenses. A delay inn seekinglsecurity for costs can be fatal to the motion, even if the plaintiff has not suffered any prejudice (see: Pelz v. Anderson, [2006] O.J. No. 4726 (S.C.J.), at paragraph 23). [7] In May 2012, in his statement of claim, Mr. Munoz disclosed hisP lace of residence to be

"...he Municipality of Pontiac, in the Province of Quebec" [emphasis added). The defendant could have made inquiries of the plaintiff then (or at the time of delivery of its statement of defence) to confirm the plaintiff's place of residence (and to determine whether a security for costs motion might be appropriate). It did not do so. The defendant also could have brought its motion then (or, indeed, at any time earlier than late October/l3). 'file I acknowledge that the pleadings were followed by an affidavit of documents that seemed to indicate that the plaintiff was then "of Ottawa", the defendant could have questioned plaintiff slcounsel as to the apparent discrepancy between the statement of claim and affidavit of documents as to the plaintiffs place of residence. This too it failed to do. [8] And while the defendant says that it was not until the ,plaintiffs examination for

discovery that it learned of the plaintiff's financial status, the plaintiff submits that his financial status "was readily ascertainable at any time". He points to the fact that, on this motion, the defendant filed an August/13 affidavit from an investigator it hired ".. ! to conduct a background investigation on [the] plaintiff'. He says, fairly in my view, that the defendant "...has provided no explanation as to why that investigation was not conducted 'earlier

in these proceedings". The

plaintiffs place of residence and financial wherewithal could have been determined earlier than three months before trial (and with the holiday season intervening in those three months).

In reaching this conclusion, I recognize that the parties were working with abridged timelinesthe action having proceeded through its various stages in an expedited manner so that the parties might have an early trial date. That fact has worked against the defendant In respect of this motion because the time to trial, from the date of the hearing of this motion, Is short.
'

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(9]

For leave to be granted, the defendant must satisfy the court that there has been a

substantial or unexpected change in circumstances such that a refusal to grant leave would be manifestly unjust; and, also, that the interlocutory step at issue (here the motion for security for costs) is necessary in the interests of justice (see: A. G, C. Mechanical Structural Security Inc. v, Rizzo, 2013 ONSC 1316 (S.C.J,), at para. 21). Mr. Munoz's testifying as to his place of residence and his means, at his examination for discovery, is not sufficient to meet the test having particular regard to the fact that he self-identified as being resident in Quebec in his statement of claim. Then too, and as counsel for the plaintiff argues, if the plaintiff's claims are frivolous and vexatious (as the defendant now posits), it is reasonable, to assume, as Quinn, J. stated in Susin v. Genstar Development Co. ((2001), 108 A.0 I'W,S, (3d) 440 (S.C.J.), at para. 7) that it "did not become so yesterday". There is evidence before me that the defendant had canvassed dates for a summary judgment motion as early as January 2013. This motion could have been brought as early as then. [10] With the defendant having been prepared to defer its'security for costs motion until after

discoveries were complete and mediation took place, it is clear to me that, from its perspective, there was no sense of urgency. And while the fact that the defendant is a corporation is not at all determinative of the issue, it is a consideration that comes into play as'to what justice dictates. This is not litigation between two equals where a personal litigant may be denied security for costs from another similarly (financially) situated personal litigant. [11] Even if I am wrong in this, I do not think that it would be just

in the circumstances of this

case to order Mr. Munoz to post some $160,000,00 as security, for costs, as sought and as at now. Mr. Munoz deposed on September 12/13 that my ordering that he post) security for costs would ",,.effectively terminate [his] ability to pursue this action". Whale Mr! Munoz admitted on cross-examination that this action would not be stopped in its tracks if an Order for security for costs were made by the court requiring him to post the same amount of money he has already expended (i.e. some $20,000,00), that is not what the defendant is asking of him. $20,000 is but 1/8 of the security sought by the defendant. 2

I also do not know how much time the plaintiff would need to raise funds. Having regard to the plaintiff's evidence as to his means and given the time of year, I expect that an Order requiring of the plaintiff that he post

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[ 12] To require of the plaintiff that he post so large an amount on the eve of trial (with all litigation steps but trial preparation and attendance at trial having already been undertaken) would, in my view, be unjust and would place an inordinate amount of litigation pressure on the plaintiff, qua litigant. [13] That said, and in any event, I am not satisfied that the defendant would succeed on its

motion even if leave were granted. On a motion for security for costsllunder R. 56.01, a two-step test applies. The initial onus is on the defendant to satisfy they court that it "appears" that the matter comes within one or more of the enumerated sets of circumstaxxces in R. 56.01(1). Once the first part of the test is satisfied, the onus shifts to the plaintiff to establish that an Order that security be posted would be unjust, To satisfy his onus, the plaintiff n ust demonstrate that he has appropriate and/or sufficient assets in Ontario or in a reciprocating jurisdiction to defray a costs Order; that he is impecunious and has a claim that is not "plainly devoid of merit"; or, that he has insufficient assets to defray a costs Order but has a claim with success". [14] - Where a plaintiff is not ordinarily a resident of Ontario; he is required to show that he has "appropriate assets" in Ontario or the jurisdiction in which he, resides that would likely satisfy an adverse costs Order. Mr. Munoz admits to being unemployed, i with no assets. He also is ordinarily resident in Quebec and not Ontario. The plaintiff fits within' the parameters of R. 56.01(1)(a). Would it be unjust to order him to post security for costs 7i The plaintiff says yes claiming impecuniosity. [15] While I accept that Mr. Munoz's evidence to support his contention that he is without

a "good chance of

means could be stronger, it is sufficiently persuasive (when considered in context) and sufficiently comprehensive. [16] Why do I say this? The plaintiff has admitted that some of the equity from a $479,500.00

Edmonton property, sold in August 2012, was deposited into a joint chequing account shared with his wife. Details were not provided, it is true. But less than one month before this action was commenced, the plaintiff and his wife purchased their current matrimonial home for

more than a nominal sum could have the effect of delaying a fixed trial date. As a master, I am without jurisdiction
to make an order that would have the effect of deferring the trial.

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$363,000.00, with the home registered solely in the name of the plaintiff's wife. There is a $324,901.84 mortgage on the property. Even if the plaintiff could tap into the equity in the home, it is but a small portion of the amount being sought, [17] Then too, the plaintiff says that he has a line of credit. t I hroughTD Canada Trust but that he has already drawn on that line of credit to fund this litigation. There is evidence that he sought to place a second mortgage on his homewith no success; an'd, there is evidence that he asked his wife (an employee of the Government of Canada) i:vr a loan and she was "unable and unwilling to loan him" money. [18] The plaintiff adduced evidence of four joint chequing accounts, shared with his wife. He had difficulty explaining the reasoning for and details of various deposits, payments, transfers and withdrawals and neither did he produce statements from all of his credit cards. The fact is, though, that the chequing accounts are joint and on the plaintiff's evidence".. .are the primary means by which [he and his wife] pay [their] living expenses" (affidavit of Mr. Munoz, sworn September 12/13). [19] The plaintiff's is a stay-at-home father. His total (gross) income for 2012, as substantiated by his income tax return, was $3,689.92. He owes money on at least one of his credit cards; and, he has only a very small ($10,000.00) RRS', [20] While I acknowledge that there are gaps in the evidence adduced as to the plaintiffs

means, I note that the plaintiff was cross-examined on his affidavit. The plaintiff was not questioned about those gaps that the defendant would now have me use against him (see: Brown
v, Dunn (1893), 6 R. 67 (H.L.), at page 70). The discussion atparagraphs 86-90 of the plaintiffs

factum is on point and apt. [21] What about the merits of the plaintiff's claim? The defendant says that the plaintiff's

claim appears to be frivolous and vexatious having regard to the evidence and, in any event, has no reasonable of success as being statute-barred. The claim was commenced more than two years after the plaintiff knew or ought to have known of the alleged wrongs that form the basis of his claimwhether discoverability came into play in 2005 or 2007. That said, s. 16(1)(a) of the
Limitations Act (2002) says that there is no limitation period

i;n respect ) of "a proceeding for a

declaration if no consequential relief is sought".

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[22] The distinction between declaratory relief and consequential relief has been described as follows: "If the Court granted the declaration, and the defendant resisted the implementation of the declaration, could the plaintiff `leave the court in peace' and enjoy the benefits of the declaration without further resort to the judicial process" (sect Yellowbird v. Samson Cree Nation No, 444, 2006 ABQB 434, aff d 2008 CarswellAlta 998 (C.A.), at paragraph 35)? "... [T]he declaration simply pronounces on what is the legal position'I' (Zamir and Woolf, The Declaratory Judgment, 4th edition (London: Sweet & Maxw ill, 2011), at paragraph 1.02). The plaintiff argues that he is seeking "...quintessentially declaratory relief, namely that the Patent Assignments are avoided, and that he is the co-owner of the Patent. No relief is being sought that would compel the [d]efendant to do anything". [23] I am not satisfied that the merits of the plaintiffs claims are as easily discernable as the defendant suggests they are. Even if the relief sought by the plaintiff is deemed to be I consequential, there is a question as to whether the date that the Patent issued triggered the question of discoverabilitywith the Patent having issued in January/1 I (see: paragraphs 71-76 of the plaintiffs factum). [24] Then too, even if the limitations threshold is passed, the actionlraises factual issues that are likely to turn on credibilityincluding the circumstances surrounding the plaintiffs execution of the impugned assignment agreements, The defendant has not adduced any of its own evidence on these factual issues. In my view, the credibility issues raised render the merits neutral, at best. [25] To recap and summarize, therefore: I do not think it appropriate that leave to bring this motion be granted and, in any event, the late timing (even having regard to the expedited litigation timelines herein) is unfortunate and, on the evidence before me as to the plaintiffs means, would place inordinate pressure on the plaintiff as he prepares for trial. (26] Even if I am wrong in this, I am not persuaded that there is good reason to believe that the action is frivolous and vexatious; and, although I accept that the plaintiff is ordinarily resident outside Ontario (and meets the dictates of R. 56.01(1)(a)), I do not think that the action is plainly devoid of merit or that an Order that the plaintiff post the security for costs sought by

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the defendant would be just (having regard to the evidence adduced as to the plaintiff's financial circumstances)? Security for costs need not be posted by the ,plaintiff, therefore, [27) It is not necessary for me, in all of the circumstances, to determine the constitutionality of

R. 56.01(1)(a) and, thus, I decline to do so. [28) date). The costs of this motion are reserved to the trial judge (given the proximity of the trial

December 12/13

note, parenthetically, that as an alternative (and last resort) position, the plaintiff has said that security, if ordered posted, should be capped at $5,000.00. There is authority for the proposition that, where security is ordered posted, it ought not to be a token amount (which $5,000.00 here would be):i! Michigan National dank v. Axel Kraft International Ltd, (1999), 30 C.P.C. (4` h ) 344 (Gen. Div.).
B

TOTAL P.008