Dataville Farms Ltd. v. Colchester County (Municipality), 2014 NSCA 81

Nova Scotia Court of Appeal Citation: Dataville Farms Ltd. v. Colchester County (Municipality) , 2014 NSCA 81 Date: 20140903 Docket: CA 423138 Registry: Halifax Between: Dataville Farms Ltd. Respondent/Appellant v. Municipality of the County of Colchester and Jonathan Baha’I (aka Jonathan Tranter dba Server Balance Solutions) Applicants/Respondents Judge: Scanlan, J.A. Motion Heard: August 21, 2014, in Halifax, Nova Scotia in Chambers Held: Motions granted Counsel: Jeffrey R. Hunt, for the applicant Municipality Charles A. Thompson, for the applicant Jonathan Baha’i Anton E.

Self, agent for the respondent Dataville Farms Ltd. Decision: [ 1 ] On August 21, 2014, I heard motions made by the Municipality of the County of Colchester and Jonathan Baha’i ( the applicants ) in which they requested an order for security for costs in relation to an appeal by Dataville Farms Ltd. (the respondents) of a decision of Justice Wood. In that case he was assessing the validity of a tax sale. [ 2 ] I ordered, the respondent to pay to the Registrar, as security for costs: $4,000 in relation to Jonathan Baha’i, and $3,200 in relation to the Municipality of the County of Colchester.

I further directed that those monies were to be paid on or before September 4, 2014, failing which the respondents would be entitled to make application to have the appeal dismissed. [ 3 ] I indicated on August 21 that reasons would follow. These are my reasons. [ 4 ] Civil Procedure Rule 90.42 governs applications for security for costs in appeals: Security for costs 90.42

(1) A judge of the Court of Appeal may, on motion of a party to an appeal, at any time order security for the costs of the appeal to be given as the judge considers just.

(2) A judge of the Court of Appeal may, on motion of a party to an appeal, dismiss or allow the appeal if an appellant or a respondent fails to give security for costs when ordered. [ 5 ] The power to order security for costs pursuant to this Rule is discretionary as to both quantum, and whether to grant the order. In exercising the discretion courts have considered the circumstances of each case keeping in mind that, as a general rule, impecuniosity should not act as a bar of litigation. That Rule has been applied somewhat differently in relation to appeals as distinct from trials in the first instance.

This was noted as far back as Cowell v. Taylor (1885), 31 C.D. 34 (C.A.) at p. 38. The Court said: ...There is an exception in the case of appeals, but there the appellant has had the benefit of a decision by one of Her Majesty’s Courts, and so an insolvent party is not excluded from the Courts, but only prevented, if he cannot find security, from dragging his opponent from one Court to another. There is also an exception introduced in order to prevent abuse, that if an insolvent sues as nominal plaintiff for the benefit of somebody else, he must give security. In that case the nominal plaintiff is a mere shadow.

The respondent’s case has been adjudged by at least one judge to have no merit.

[ 6 ] In earlier applications pursuant to Rule 90.42 judges have referred to applicants having to show the existence of “special circumstances” in order to have the court exercise discretion and order security for costs (see Lienaux v. Campbell, 2011 NSCA 94 ¶16). Beveridge, J.A. said in Sable Mary Seismic Inc. v. Geophysical Services Inc. , 2011 NSCA 40 , ¶6): [6] There are a variety of scenarios that may constitute "special circumstances". There is no need to list them.

All bear on the issue of the degree of risk that if the appellant is unsuccessful the respondent will be unable to collect his costs on the appeal. In Williams Lake Conservation Co. v. Kimberley-Lloyd Development Ltd. , 2005 NSCA 44 , Fichaud J.A. emphasized, merely a risk, without more, that an appellant may be unable to afford a costs award is insufficient to constitute "special circumstances". ... [ 7 ] Mr. Anton Self acted as agent for Dataville Farms Ltd. on these motions. Mr.

Self made it clear that the only asset Dataville Farms Ltd. has is property which the lower courts had ruled, was properly sold at the tax sale. Other than the assets sold at the tax sale the company is a shell company. There is no chance of the applicants recovering costs from that shell company if the respondent loses on appeal. [ 8 ] Justice Wood ordered costs in the original trial totalling approximately $19,000; that is $10, 861.70 to the Municipality of Colchester and $8,375.00 to Jonathan Baha’i. Those costs have not been paid.

Failure to pay previous costs amounts as ordered by the court is a valid consideration in motions such as now before the court. The filing of an appeal does not operate as a stay in those costs awards or the order of Justice Wood. I therefore consider those amounts as presently due and outstanding and the fact that the respondent company is without assets. [ 9 ] The existence of unsatisfied judgments are also valid considerations in motions for security for costs.

The applicants submitted affidavit evidence which shows that Dataville Farms Ltd. has an unsatisfied judgment in relation to a judgment held by Dynamic Properties Ltd.; the respondent is one of the judgment debtors on a judgment in the amount of $139,973.59. [ 10 ] The fact that the above-noted amounts are outstanding is further confirmation that, if the respondent shell company does not succeed in its appeal, the applicants will not recover their costs of the appeal, even if successful. [ 11 ] As part of the affidavit evidence tendered in support of the motions for security for costs the applicants referred to a number of other judgments against Mr.

Self personally as well as a company, Bastionhost Ltd. and the respondent company. The affidavit purports to explain that Mr. Self and the two companies are so intermingled in terms of ownership and control that I should consider them as a single entity. They argued that the combined judgments against Mr. Self, Dataville Farms Ltd. and Bastionhost Ltd. exceed $300,000.00. They argued that the inter-relationship means that I should consider the outstanding judgments against all of them as being indicative of the fact that the applicants will not recover any costs award made against Dataville Farms Ltd.

In response to this assertion, Mr. Self argues that I am obliged to respect the corporate integrity of Dataville Farms Ltd. and not consider these judgments against Anton Self and Bastionhost Ltd. because he says they do not involve the respondent. [ 12 ] It is clear from both the materials before the Court, and representations made by Mr. Self, that Bastionhost Ltd., Anton Self and Dataville Farms Ltd. are very closely related. [ 13 ] Mr. Self was hard to follow in the sense that on the one hand in his submission he urged me to respect the corporate integrity of the respondent corporation.

In the next breath he urged me to take into account the fact that he and his family of companies has satisfied many outstanding judgments before. In other words, on the one hand he was saying respect the corporate identity of the respondent, on the other hand he said look, Anton Self and his nucleus of companies has satisfied judgments and I should not discount the fact that even this shell company may satisfy a judgment for costs because the constellation of Mr. Self’s companies has done so before. [ 14 ] It is not necessary for me to resolve the duplicitous or conflicting nature of Mr. Self’s submissions.

The materials before me related to Dataville Farms Ltd. alone are enough to satisfy me that the applicants will not recover any award of costs if they succeed on the appeal. [ 15 ] Mr. Self also urged me to take into account the fact that the applicant, Mr. Baha’i bought the property at such a deep discount at the tax sale that Mr. Baha’i should not now expect security for costs. That argument is without merit. [ 16 ] I have concluded that there is at least one outstanding registered judgment, plus the outstanding orders for costs against the respondent company and that company is but a shell.

The applicants are entitled to protection as against what would inevitably be a hollow victory, as it relates to costs, should the applicants succeed on appeal. I am satisfied this constitutes special circumstances justifying the granting of the motions for security for costs. [ 17 ] As to quantum I refer to the costs awarded at trial. I ordered security for costs based on approximately 40% of the cost awards at trial. Scanlan, J.A.