Avalon Consulting v. Independent Power, 2010 ONSC 2573

CITATION: Avalon Consulting v. Independent Power, 2010 ONSC 2573 COURT FILE NO.: 81/10 DATE: 2010/04/30 SUPERIOR COURT OF JUSTICE - ONTARIO RE: AVALON CONSULTING PROFESSIONALS OF ONTARIO, LLC - and - INDEPENDENT POWER CORP carrying on business as IPC ENERGY BEFORE: The Honourable Mr. Justice D. J. Taliano COUNSEL: J. Ross Macfarlane, for the Plaintiff/Responding Party Barrie R. N. Attzs, for the Defendant/Moving Party E N D O R S E M E N T [ 1 ] The defendant seeks an order requiring the plaintiff to post security for costs pursuant to R. 56.01(1)(

a) of the Rules of Civil Procedure . This rule applies to a litigant that is “ordinarily resident outside of Ontario”. [ 2 ] In this case, the plaintiff is a corporation that was created in the State of Florida. Although I would have thought that this motion was more appropriately brought invoking subrule (d), that

section was not invoked nor relied upon. [ 3 ] The term “resident” is not a term which is easily applied to a corporate entity. Residency is an expression that usually relates to where a person lives on a permanent basis, works and pays taxes. To determine a corporation’s residence requires a consideration of somewhat different considerations. [ 4 ] Mr. Attzs, counsel for the defendant, urges the court to consider

Article IV,

section 3 of the Tax Convention between the United States and Canada, which stipulates that for tax purposes, corporate residency is governed by the place where the corporation was created. However, I do not agree that it is wise or appropriate to limit the meaning of the word in such a restrictive way when interpreting the rule.

Corporate residency must be determined by examining a variety of other factors which would include, the location of the corporation’s business activities, the location of its office or offices, the residence of its management and, if it has employees, their location, and the location of its assets, to name but a few of the other factors that would be pertinent. [ 5 ] In this case, some of this information has been provided by the affidavit material. The material indicates that the plaintiff leases an office at 24 Jarvis Street in the Town of Fort Erie where it has certain basic office equipment.

The company has receivables and assets in this province and it pays its regular monthly bills that are incurred in this province. The company is also bidding on other business projects in this province. Although it is not clear where the directing mind or minds of the plaintiff corporation reside, in this age of instant communication, internet access, and readily accessible and fluid international business borders, rigidity in the

interpretation of such words as “residence” is no longer helpful. In other words, the plaintiff has established a sufficient presence in and connection to this province and I have not therefore been satisfied by the moving party that the plaintiff’s residence is outside of Ontario for the purposes of this rule. [ 6 ] In addition, although it is apparent that the plaintiff’s resources are stretched thin, the plaintiff’s allegation is that its economic difficulty is a direct result of the defendant’s conduct in not paying invoices totalling $238,665.30.

There is also evidence that the defendant did not dispute the invoices and permitted the plaintiff to continue to perform its services without complaint or payment. Accordingly, in my view, the plaintiff has a credible claim and it is more probable that the plaintiff will succeed in recovering at least a

portion, if not all, of its claim than it is for the defendant to be completely successful in defending the claim. [ 7 ] Accordingly, the motion for security is denied. If costs need to be addressed, I may be spoken to through a telephone conference to be arranged through the local trial co-ordinator’s office. ___________________________ Taliano, J. DATE: April 30, 2010 COURT FILE NO.: 81/10 DATE: 2010/04/30

SUPERIOR COURT OF JUSTICE - ONTARIO RE: AVALON CONSULTING PROFESSIONALS OF ONTARIO, LLC - and – INDEPENDENT POWER CORP carrying on business as IPC ENERGY BEFORE: Justice D. J. Taliano COUNSEL: J. Ross Macfarlane, for the Plaintiff/Responding Party Barrie R. N. Attzs, for the Defendant/Moving Party ENDORSEMENT Taliano, J. DATE: April 30, 2010