Kucera v. Qulliq, 2012 NUCJ 14

nunavuumi iqkaqtuijikkut NUNAVUT COURT OF JUSTICE La Cour de justice du Nunavut Citation: Kucera v. Qulliq, 2012 NUCJ 14 Date: 20120824 Docket: 08-10-749-CVC Registry: Iqaluit Plaintiff: Sarah Kucera -and- Defendant: Qulliq Energy Corporation ________________________________________________________________________ Before: The Honourable Mr. Justice Johnson Counsel (Plaintiff): P. Hunt Counsel (Defendant): R.M. Beamish Location Heard: Iqaluit, Nunavut Date Heard: June 29, 2012 Matters: Nunavut Rules of Court, R.N.W.T. R-010-96, as duplicated for Nunavut by s.29 of the Nunavut Act, S.C. 1993, c. 28 , Rules 632, 633(1)(

a) and (2), 635,636,641,643,648(4) and 649. REASONS FOR JUDGMENT (NOTE: This document may have been edited for publication) I. INTRODUCTION

[ 1 ] The plaintiff (respondent) commenced an action for wrongful dismissal in November 2010, and the defendant (applicant) filed a statement of Defence in February 2011. Examinations for discovery were completed in June 2011. [ 2 ] On February 14, 2012, the applicant filed a motion for security for costs and on May 4, the respondent filed a cross motion seeking an order that the applicant provide answers to undertakings and questions objected to at discovery. [ 3 ] Both parties filed affidavits in support of the motions. Neither party conducted a cross-examination on the affidavits.

Judgment was reserved. [ 4 ] Counsel for the plaintiff also represents the plaintiff Amy Hynes in the companion judgment issued at the same time as this judgment. Both motions were argued together but contain different facts. II.

FACTS [ 5 ] The respondent entered into a contract of employment with the applicant commencing on July 1, 2009, to work in the position of executive assistant to the president and chief executive officer of the applicant. [ 6 ] During the course of her employment, the respondent believed that the applicant had unilaterally imposed material changes to the terms and conditions of her employment. The applicant did not accept her arguments resulting in a difficult work environment.

As a result of the stress of the work environment, the respondent went on medical leave. [ 7 ] The respondent retained legal counsel to advise her and he wrote a letter that the applicant received on August 5, 2010, indicating a willingness to enter into negotiations for a termination package. [ 8 ] On August 6, 2010, the applicant terminated the employment of the respondent by way of a written termination letter. The letter alleged just cause for the termination and advised the respondent to vacate her employer provided housing unit within 21 days.

The letter further informed the respondent that she was prohibited from working for the applicant or the Government of Nunavut [GN] for a period of two years. [ 9 ] As a result of the short time to vacate the housing unit, medical issues flowing from the termination, and the prohibition of employment, the respondent moved to Toronto to seek employment. [ 10 ] On September 8, 2010, the respondent obtained new employment at a salary of $74,460 per year plus an annual bonus of $5,000.

The respondent’s spouse also obtained employment in Toronto with the employer who employed him prior to his move to Iqaluit with the respondent. [ 11 ] The respondent rents her accommodation in Toronto and deposed that she had “limited assets in Ontario as my personal debt exceeds the value of those assets that I do own”.

She also stated it would be unjust to require her to pay security for costs where her action stands a good chance of success at trial. [ 12 ] The respondent deposed that her solicitor has advised her that she has a substantial chance of success in the action because she was terminated while she was on medical leave and that there was no cause for the dismissal. Particulars of the cause were not provided in the termination letter and have never been provided to her. [ 13 ] It was acknowledged in argument that the respondent does not own any assets in Nunavut that could be seized to satisfy a judgment for costs.

III. ARGUMENT A. Security for Costs (i). Applicant [14] Since the respondent is not a resident of Nunavut and has no assets in Nunavut to satisfy a judgment, the applicant argues that it hassatisfied Rule 633 (1) (

a) of the Rules of Court. Relying on Drywall Services v PCL Constructors, (NWT SC),[1991] NWTR 210, 47 CPC (2d) 33, the applicant notes that the general rule is that security for costs should be ordered where theplaintiff is an individual who resides outside of the jurisdiction.

However, the applicant concedes that a judge has the ultimate discretionto decide if an order for security for costs is a fair and just remedy that takes into account the circumstances of the plaintiff and themerits of the action so as to ensure that no injustice occurs. [15] Since the applicant has satisfied Rule 633 (1), the respondent has the onus of satisfying the Court that the interests of justicedemand that she be allowed to proceed with the action without having to post security for costs. [16] The applicant argues that the respondent is not without financial resources since she is employed and earning an annual salary of$72,000 per year.

Although the respondent claims that her debts exceed her assets, she did not provide any particulars to substantiate herclaim. Where a plaintiff claims impecuniosity there is an obligation to provide enough information to permit the Court to analyze theinformation and be satisfied as to the accuracy of the claim. [17] The applicant argues that it has a good defence to the action because the respondent quit of her own volition alleging she wasconstructively dismissed.

The applicant argues that the respondent’s decision to retain legal counsel to tell the applicant that therelationship was now adversarial was a breach of the respondent’s obligation of trust and fidelity that justified the termination of theemployment relationship. [18] Furthermore, the applicant argues that the respondent was aware when she was hired that the applicant was doing a job evaluationand should have expected some changes in her position during her first year of employment.

As noted in MacKinnon v AcadiaUniversity, 2009 NSSC 269, 282 NSR (2d) 285, changing job roles and duties in an administrative context was a natural part of anemployment relationship and did not amount to a fundamental breach of an essential term of the employment contract. [19] In the event the Court exercised its discretion to require the respondent to post security for costs, the applicant provided a draft Billof Costs that suggested the amount of $5,165 would be appropriate. It requested security of between $5,000 and $10,000. (ii).

Respondent [20] Relying on Nuna Investments Corp. v Shell Canada Ltd, (NWT SC), [1998] NWTJ No 10, [1998] NWTR 53[Nuna], the respondent noted that the mere fact she was not a resident of Nunavut does not entitle a defendant to security for costs. Asnoted in Mortimer v Inuvaluit Regional Corp, (NWT SC), [1987] NWTR 228, 5 ACWS (3d) 113 [Mortimer], thedefendant must show that an impecunious plaintiff has virtually no chance of success in order to succeed on an application for securityfor costs. [21] In exercising its discretion, a court will consider what is just in the circumstances of each case.

As noted in Al’s Truck Stop vCarter Industries Ltd, 1998 CarswellNWT 157, (NWT SC), and Chacula v. Baillie, (ON SC), 69OR (3d) 175, 2004 CarswellOnt 6, the determination of what is just involves a multitude of factors, including the merits of the claim.

Itrequires a review of the plaintiff’s circumstances and the possible effect of an order for security for costs preventing a bona fide claimfrom proceeding. [22] As held in Shuter v Toronto Dominion Bank, (ON SC), [2007] OJ No 3435, 2007 CarswellOnt 5732 [Shuter],the rules relating to security for costs are not intended to bring actions to an end that are well founded in the event the plaintiff is unableto post security. Further, where a plaintiff is without funds as a result of the acts of the defendant which have given rise to the litigation,

caution must be exercised before ordering security for costs. [23] As held in John Wink Ltd v Sico Inc, (ON SC), 15 CPC (2d) 187, 57 OR (2d) 705, unless a claim is plainlydevoid of merit, it should be allowed to proceed, notwithstanding the plaintiff’s lack of assets. [24] The respondent has deposed that her personal debt exceeds the value of any assets. Although she may not be impecunious, it wouldbe difficult for her to raise the money requested by the applicant. As held in Uribe v Sanchez, 33 CPC (6th) 94 [Uribe], a plaintiff doesnot have to be impecunious in order to avoid a security for costs order.

It is sufficient if the plaintiff establishes that the order wouldimpose a substantial impediment to pursuing the action. [25] As held in 42322 Ontario Ltd v Bank of Montreal (1988), (ON SC), 41 CPC (2d) 249, 66 OR (2d) 123, therespondent argues it would be unjust to order security for costs where her present financial circumstances have been substantiallydiminished by the actions of the applicant.

It would be further unjust to order security for costs given that the plaintiff’s relocation fromNunavut was undertaken as a matter of necessity for the purpose of mitigating her damages. [26] As held in Cigar500.com Inc v Ashton Distributors Inc, (ON SC), 77 CPC (6th) 80, 99 OR (3d) 55 [Cigar500],and Nuna, the defendant’s conduct is a relevant consideration when determining what is just.

This Court is required to consider whetherthe insufficiency of the respondent’s assets is a result of the applicant’s breach of contract. [27] As held in Pharand v Middlebrook, [1998] OJ No 889, 80 ACWS (3d) 31 [Pharand], where a court determines that a plaintiff hassufficient assets to satisfy a security for costs award, the issue becomes whether a creditor can enforce a judgment against a debtor thathas assets in another jurisdiction.

If there is a mechanism to have the judgment recognized and enforced, there is no need for an order forsecurity. [28] Ontario is a reciprocating jurisdiction for the purpose of enforcing judgments under the reciprocal Enforcement of Judgments Act,RSO 1990, c R5. As held in Mortimer and McLennan v Parent, 1995 CarswellNWT 61 [McLennan], it is not enough for the defendantto rely on the absence of exigible assets in Nunavut when the plaintiff resides in a reciprocating jurisdiction.

As held in Frank vNorthwest Territories, (NWT SC), [1985] NWTR 149, 1985 CarswellNWT 13, the existence of reciprocal legislationis a proper consideration when exercising judicial discretion to deny security for costs. [29] The respondent distinguished those cases on security for costs that involve two corporations from the case at bar where a formeremployee is suing a large territorial corporation with substantial assets. [30] The respondent noted that Mortimer had been applied in the unreported decision of this court on April 16, 2004, in Whitty andAssociates v Kakivak Developments Corp, (Court File CV-0000407), and submitted that Mortimer fits the circumstances in the case atbar.

For one thing, it is the only wrongful dismissal case among the authorities relied on by either party. [31] The actions of the applicant in terminating employment and removing the housing benefit forced the respondent to move out of theTerritory. As well, the move had the positive effect of mitigating the respondent’s damages and this Court should be very careful aboutfurther penalizing the plaintiff for this positive result. [32] Finally, the respondent relies on Lowe v Inuvik, (NWT SC), [1984] N.W.T.R. 278, 1984 CarswellNWT 16[Lowe], to argue that if she is ordered to pay security it should only be nominal. IV.

Analysis [33] Rule 633 of the Rules of Court states:

(1) The Court, on the application of a defendant in a proceeding, may make such order for security for costs as it considers just where it appears that (

a) the plaintiff is ordinarily resident outside the Territories; (

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

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

d) the plaintiff brings the proceeding on behalf of a class or an association, or is a nominal plaintiff, and there is good reason to believe that the plaintiff has insufficient assets in the Territories to pay costs; (

e) there is good reason to believe that the proceeding is frivolous or vexatious and that the plaintiff has insufficient assets in the Territories to pay costs; or (

f) a statute entitles the defendant to security for costs.

(2) Notwithstanding subrule (1), the Court may order any party to a proceeding to furnish security for costs where the Court has a discretion to impose terms as a condition of granting relief and, where such an order is made, rule 635 applies with such necessary modifications as the circumstances require. [ 34 ] Since the respondent acknowledges that she does not reside in Nunavut and has no assets in the Territory, the applicant has satisfied subsection (

a) and made out a prima facie case for security for costs. [ 35 ] However, that does not end the inquiry because a court must also be satisfied the order would be just. In this phase of the inquiry, the onus shifts to the respondent to demonstrate why an order would not be just and requires a court to inquire into all factors that have a bearing on the “justice of the case” including the merits of the claim. These include the merits of the claim, the financial circumstances of the plaintiff and the possible effect of an order for security preventing a bona fide claim from proceeding.

Another factor is whether the plaintiff’s residence is in a reciprocating jurisdiction for purposes of enforcing judgments. [ 36 ] The respondent does not claim she is impecunious but rather that posting security in the amount suggested by the applicant will cause her such financial hardship that it would impose a substantial impediment to pursuing the action and prevent a meritorious case from proceeding.

As noted in Uribe, where a plaintiff claims hardship rather than impecuniousity the plaintiff must show that he or she has a good chance of success or a real possibility of success. [ 37 ] The respondent’s evidence of hardship is very deficient. She simply states that she has “limited assets in Ontario as my personal debt exceeds the value of those assets that I do own”. She did not provide any information on the type and value of assets she owned nor did she provide particulars of the debts. She provided no information about her husband’s financial circumstances except to say that he was also employed.

She also testified in discovery that she lived in rented premises. Most importantly, the respondent said nothing about her ability to borrow any money to satisfy the modest security requested by the applicant. [ 38 ] I am unable to infer from this very limited information that posting security would cause such hardship that the action would be jeopardized. By way of comparison, the plaintiffs in Nuna provided affidavits showing they were financially destitute. They suffered health problems and lived on unemployment insurance.

In Mortimer , the plaintiff was also unemployed, recuperating from a heart attack and had no assets except for furniture and clothing. I believe the respondent falls into the same category as the plaintiffs in Suter. She has a decent standard of living and posting security will impinge on her lifestyle. However, there is insufficient evidence to suggest hardship that would prevent her from posting some security. [ 39 ] I am satisfied from my review of the evidence filed on the motion that the respondent has a good possibility of success. While the

evidence filed is insufficient to gauge the success of the constructive dismissal argument, it appears that the respondent was terminatedbecause she retained legal counsel. In my view, the applicant will have an uphill battle to establish cause on these facts. [40] The most significant issue will be the quantum of damages. The respondent was only employed for 13 months and significantlymitigated her damages by obtaining new employment. Given the short period of employment, I would not expect the trial judge to awardmore than six months for the notice period.

The respondent also claims bad faith termination damages of $200,000. However, thosetypes of claims have a very low chance of success where the employee has been able to obtain new employment. [41] Ontario is a reciprocating jurisdiction for the enforcement of Nunavut judgments. This is a significant factor for this Court toconsider as noted in Mortimer, McLennan and Pharand.

I adopt the following words of Vertes J. in McLennan at para 19: There are a line of cases from this jurisdiction that have held that the fact of nonresidence, and the absence (as here) of exigible assets inthe jurisdiction, are insufficient, in and of themselves, to warrant security for costs where the plaintiff resides in a reciprocatingjurisdiction: see, for example, Frank v. Commissioner of the Northwest Territories (NWT SC), [1985] N.W.T.R. 149(S.C.); and Mortimer v. Inuvialuit Regional Corporation (NWT SC), [1987] N.W.T.R. 228 (S.C.).

These authoritieswere criticized by the Alberta Court of Appeal in Crothers v. Simpson Sears Ltd., 1988 ABCA 155 , [1988] 4 W.W.R. 673, onthe basis that reciprocal enforcement legislation still threw up significant barriers to recovery. In my view, however, the reasoning in thecases from this jurisdiction has only gained greater strength from the liberalization of reciprocal enforcement procedures promulgated bythe Supreme Court of Canada in Morguard Investments Ltd. v.

De Savoye, (SCC), [1990] 3 S.C.R. 1077. [42] The respondent relies on Cigar500 and Nuna to argue that a significant factor to consider is the conduct of the applicant in causingthe respondent’s financial hardship. I am satisfied that the applicant’s response to the discovery that the respondent had retained legalcounsel caused the applicant to overreact. The respondent was without housing after 21 days and prohibited from employment with theGN. In Nunavut the cost of housing is exorbitant, where it can be found.

The major employer in Nunavut and Iqaluit is the GN andwithout housing or the prospect of employment with the GN, the respondent was effectively forced to leave Nunavut. Fortunately, therespondent found new employment in a short time and was able to significantly mitigate her losses. There is no doubt the suddentransition from the north to the south was expensive and a significant factor in creating her alleged financial hardship.

While the financialinformation provided by the respondent was inadequate, it is clear that the applicant will ultimately benefit from the mitigation if therespondent is successful in the action. [43] In Lowe, de Weerdt J. noted that a court may sometimes award nominal costs where posting full security may prevent a meritoriousaction from proceeding and the plaintiff is impecunious. De Weerdt J. referred to Sonntag v. Krause (1975), (ON SC),11 OR (2d) 500, where nominal security of $50.00 was ordered.

Taking inflation into account, the respondent argues that $500.00 wouldbe the equivalent in 2012 dollars. [44] The final factor to consider is the inequality of resources between the applicant and the respondent. The applicant is a largeterritorial corporation with significant financial resources while the respondent is a struggling middle class Canadian. If the plaintiff isunsuccessful, the applicant has the resources to pursue the respondent for costs in Ontario under reciprocal enforcement of judgmentlegislation. [45] Taking all these factors into account, I decline to order security for costs.

The application is therefore dismissed and the costs of theapplication will be costs in the cause. V. CONCLUSION A. Answers to Undertakings and Refusals [46] These issues were resolved subsequent to the first hearing of application.

Dated at the City of Iqaluit this 24th day of August, 2012 ___________________ Justice E. Johnson Nunavut Court of Justice