2014 MBCA 46, 2014 MBCA 46

Citation: Moss (Bankrupt), Re, 2014 MBCA 46 Date: 20140508 Docket: AI 13-30-08098 IN THE COURT OF APPEAL OF MANITOBA Coram: Madam Justice Barbara M. Hamilton Madam Justice Holly C. Beard Madam Justice Diana M. Cameron BETWEEN : DANNY MOSS ) D. Moss ) on his own behalf Appellant ) ) R. W. Schwartz - and - ) for the Respondent ) ) Appeal heard and KEITH G. COLLINS LTD., AS TRUSTEE ) Decision pronounced: OF THE ESTATE OF DANIEL MOSS, ) May 5, 2014 A BANKRUPT ) ) Written reasons: Respondent ) May 8, 2014 HAMILTON J.A. [ 1 ] We denied Mr.

Moss leave to appeal the order of a motion judge requiring him to pay security for costs pursuant to Queen’s Bench Rule 56.01: SECURITY FOR COSTS WHERE AVAILABLE 56.01 The court, on motion in a proceeding may make such order for security for costs as in the particular circumstances of the case is just, including where the plaintiff or applicant, (

a) is ordinarily resident outside Manitoba; (

b) has another proceeding for the same relief pending; (

c) has failed to pay costs as ordered in the same or another proceeding;

(

d) is a corporation or a nominal plaintiff, and there is good reason to believe that insufficient assets will be available in Manitoba to paycosts, if ordered to do so; or (

e) a statute requires security for costs. [emphasis added] [2] When announcing our decision we advised that brief reasons would follow. These are those reasons. [3] Mr. Moss, who is a discharged bankrupt, sought leave pursuant to s. 215 of the Bankruptcy and Insolvency Act, to suethe respondent, who had been the trustee in bankruptcy with respect to his estate. [4] He, and his wife and daughter, have been involved in extensive litigation in the Court of Queen’s Bench and this courtwith respect to the bankruptcy and other matters. The courts ordered Mr. Moss to pay costs in numerous proceedings. [5] Mr.

Moss never paid the costs ordered against him. However, the outstanding costs were part of the comprehensivesettlement agreement entered into in 2011 between the respondent, Mr. Moss and his wife and daughter. Pursuant to the settlementagreement, Mr. Moss became a discharged bankrupt. While he did not have legal counsel himself, his wife and daughter each had alawyer. His wife’s lawyer witnessed Mr. Moss’s signature. The settlement agreement was approved by the court. [6] Mr.

Moss sought leave to commence an action against the respondent, asserting, among other things, that he signedthe settlement agreement under duress or coercion. The registrar in bankruptcy denied him leave to commence the action. See Moss(Bankrupt), Re, 2013 MBQB 178, 295 Man.R. (2d) 122. [7] After Mr. Moss filed a motion in the Court of Queen’s Bench appealing the registrar’s decision, the respondent filedits motion seeking security for costs. [8] The motion judge was satisfied that, in the particular circumstances of this case, it was just to make an order forsecurity for costs in the amount of $15,000.

When taking into account Mr. Moss’s position, he was impecunious, he applied theconsiderations articulated in DeBono v. Smith et al. (1989), (MB KB), 62 Man.R. (2d) 98 (at para. 7): The court must take care to ensure that an order for security for costs is not used by a defendant to defeat a valid claim by a plaintiff. Accordingly, when a plaintiff seeks to avoid an order to provide security on the basis of his own impecuniosity, the court must proceedcautiously.

This is especially so where the plaintiff alleges that his inability to provide security flows from the very actions of thedefendant which form the subject matter of the action.

However, where a defendant would otherwise be entitled to an order for securityfor costs and a plaintiff seeks to avoid such an order on the basis of his own impecuniosity, the plaintiff must demonstrate not only thathe has insufficient financial resources to post security, but must also show why the interests of justice demand that he be allowed toproceed without being required to give security. [9] The motion judge, as he was required to do, considered the lack of merit of the action proposed by Mr. Moss.

In thatregard, he referred to the registrar’s reasons, which concluded that “it would be a clear abuse of process to grant [Mr.] Moss leave tocommence an action against the trustee” (at para. 13). [10] The motion judge concluded that, based on the history of the bankruptcy proceedings and Mr. Moss’s disregard forprevious court orders, he found that “there is ample reason to believe that Mr. Moss will attempt to avoid paying any costs which mightbe awarded against him.” [11] Mr. Moss did not seek leave to appeal the motion judge’s decision pursuant to s. 193(

e) of the Bankruptcy andInsolvency Act, as he should have. Given that the substance of the appeal had been addressed in the facta and the submissions, we agreedto consider the issue of leave in the context of the arguments raised in Mr. Moss’s appeal documents. [12] One of the criterion to be met on a motion for leave is that the applicant must establish an arguable case of substance. See Moss Estate (Bankrupt), Re, 2005 MBCA 59, 192 Man.R. (2d) 305. [13] A decision of a judge on a motion for security for costs is a matter of discretion.

Deference is owed to the decisionunless the judge has misdirected himself with respect to the applicable law or the facts or where the decision has resulted in an injustice. See Ataliotis v. Assiniboine Credit Union Ltd., 2014 MBCA 16, and Towers Ltd. v. Quinton’s Cleaners Ltd. et al., 2009 MBCA 81, 245Man.R. (2d) 70. [14] Mr. Moss has not demonstrated that there is any arguable question, let alone one of substance, that the motion judgemisdirected himself about the law or the facts.

Neither has he demonstrated any arguable question that the decision has resulted in aninjustice. [15] For these reasons we denied leave to appeal. We ordered costs at the applicable tariff in favour of the respondent andalso ordered that Mr. Moss shall not be entitled to proceed with his appeal from the decision of the registrar made on July 12, 2013,

unless, in addition to paying the security for costs ordered in the amount of $15,000, he also pay the respondent the costs for this proceeding. [ 16 ] We waive the requirement that the order be sent by the respondent’s counsel to Mr. Moss for his approval as to form. J.A. J.A. J.A.