Wall v. 679927 Ont. Ltd., (1999) 176 N.S.R.(2d) 96 (CA)

• Judge: Bateman, Flinn and Cromwell, JJ.A.
• Court: Court of Appeal of Nova Scotia (Canada)
• Case Date: January 05, 1999
• Jurisdiction: Nova Scotia
• Citations: (1999), 176 N.S.R.(2d) 96 (CA);1999 CanLII 7240 (NS CA);[1999] NSJ No 124 (QL);176 NSR (2d) 96;29 CPC (4th) 204;538 APR 96

Wall v. 679927 Ont. Ltd. (1999), 176 N.S.R.(2d) 96 (CA);

    538 A.P.R. 96

MLB headnote and full text

Temp. Cite: [1999] N.S.R.(2d) TBEd. MY.038

David H. Wall (appellant) v. Horn Abbot Ltd., 679927 Ontario Limited (formerly Horn Abbot Productions Limited), Christopher Haney, Charles Scott Abbott, John Haney and Edward Martin Werner (respondents)

(CA 149781)

Indexed As: Wall v. 679927 Ontario Ltd. et al.

Nova Scotia Court of Appeal

Bateman, Flinn and Cromwell, JJ.A.

April 15, 1999.

Summary:

The plaintiff sued the defendants alleging that the defendant Christopher Haney stole the idea for the game Trivial Pursuit from him and that the defendants had profited as a result. Upon an application by the defen­dants, a chambers judge ordered the plaintiff to post $100,000 as security for payment of the defendants' costs. The plaintiff appealed the order, arguing that it would have the effect of preventing him from proceeding with the litigation.

The Nova Scotia Court of Appeal allowed the appeal and varied the chambers judge's order to require the plaintiff to post $10,000 as security for costs.

Editor's Note: For a previous decision involving these parties see 156 N.S.R.(2d) 360; 461 A.P.R. 360.

Courts - Topic 692

Judges - Disqualification - Bias - Arising out of expressed opinions on legal issues - A chambers judge ordered the plaintiff to post $100,000 as security for the defen­dants' costs - The plaintiff appealed the order - He argued, inter alia, that the judge denied him natural justice in making public statements on the merits, which were prejudicial to the plaintiff and his ability to comply with the order for secur­ity for costs, without a fair hearing of all of the evidence on the merits - The Nova Scotia Court of Appeal rejected the argu­ment - The judge's comments were made after two days of evidence and a day of argument and the giving of his impression of the case at that point could not be char­acterized as prejudgment or as displaying any lack of impartiality - See paragraph 25.

Evidence - Topic 1672

Hearsay rule - Hearsay rule exceptions and exclusions - Statements of physical sensa­tion and mental condition - State­ments by an alleged conspirator - [See first Practice - Topic 3664 ].

Practice - Topic 3630

Evidence - Affidavits - Making of - Grounds or source of information and belief - [See Practice - Topic 3666 ].

Practice - Topic 3664

Evidence - Affidavits - Striking out - Hearsay - A chambers judge ordered the plaintiff to post $100,000 as security for the defendants' costs - The Nova Scotia Court of Appeal held that the chambers judge should have struck out an affidavit sworn by a private investigator hired by one of the defendants because, inter alia, it contained hearsay evidence - The court rejected the defendants' argument that the hearsay was admissible because it con­sisted of statements made by a conspirator in furtherance of an unlawful conspiracy - The court stated that before hearsay became admissible, there had to be admis­sible evidence showing that the existence of an alleged conspiracy was probable, i.e., the hearsay evidence could not establish the conditions of its own admissibility - See paragraph 39.

Practice - Topic 3664

Evidence - Affidavits - Striking out - Hearsay - [See Practice - Topic 3666 ].

Practice - Topic 3666

Evidence - Affidavits - Striking out - Irrelevant or improper matters - A cham­bers judge ordered the plaintiff to post $100,000 as security for the defendants' costs - The Nova Scotia Court of Appeal held that the chambers judge should have struck out an affidavit sworn by a private investigator hired by one of the defendants - The affidavit was directed at the credi­bility of the plaintiff and his claims and it was improper because it invited the type of inquiry into the merits of the plaintiff's case that should not be undertaken on an interlocutory application - Further, the affidavit contained: (1) statements which were not within the deponent's personal knowledge without the deponent indicating that he believed the material or setting out the ground of his belief; (2) hearsay upon hearsay; and (3) scandalous and irrelevant material - See paragraphs 26 to 41.

Practice - Topic 3678

Evidence - Affidvits - Use of - Affidavits made on information and belief - [See Practice - Topic 3666 ].

Practice - Topic 3682

Evidence - Affidavits - Use of - Inter­locu­tory applications and motions - [See Prac­tice - Topic 3666 ].

Practice - Topic 8105

Costs - Security for costs - Considerations - A chambers judge ordered the plaintiff to post $100,000 as security for the defen­dants' costs based on his findings that the plaintiff's claim had a limited chance of success and that he did not have enough money to pay the defendants' costs - The Nova Scotia Court of Appeal allowed an appeal and varied the chambers judge's order to require the plaintiff to post $10,000 as security for costs - The cham­bers judge erred in failing to strike out an affidavit sworn by a private investigator hired by one of the defendants and in relying on its contents - More fundamen­tally, he erred in basing his assessment of the merits of the plaintiff's claim on find­ings of credibility and findings of fact that were in dispute on an interlocutory appli­cation - He also erred in failing to find that the order for security would prevent the plaintiff from pursuing the action - See paragraph 84.

Practice - Topic 8105

Costs - Security for costs - Considerations - The Nova Scotia Court of Appeal stated that a review of the case law revealed three clear principles which were consist­ently applied - "First, orders for security should not be used to keep persons of modest means out of court. Second, while the merits of the plaintiff's case are rel­evant and may be considered, they should only be considered on the basis of undis­puted facts, the pleadings, etc. and not on the basis of seriously disputed facts or as­sessments of credibility. Third, consider­ation of the merits should only be decisive where they are clear and obvious. In short, the law relating to consideration of the merits on interlocutory applications for security for costs is in harmony with the general reluctance to assess the merits of a claim or defence, other than in obvious cases, before trial" - See paragraph 59.

Practice - Topic 8105

Costs - Security for costs - Considerations - The Nova Scotia Court of Appeal stated that "[t]he merit of the plaintiff's case is a relevant consideration to the exercise of discretion to grant or refuse security for costs. The extent to which the merits may properly be considered varies depending on the nature of the case. If the case is com­plex or turns on credibility, it is generally not appropriate to make an assessment of the merits at the interlocutory stage. The assessment of the merits should be deci­sive only where: (a) the merits may be properly assessed on an interlocutory application; and (b) success or failure appears obvious" - See paragraph 83.

Practice - Topic 8105

Costs - Security for costs - Considerations - The Nova Scotia Court of Appeal stated that "[i]f the plaintiff resists security that would otherwise be ordered on the basis that the order will stifle the action, the plaintiff must establish this by detailed evidence of its financial position including not only its income, assets and liability, but also its capacity to raise the security. Where the order for security will prevent the plaintiff from proceeding with the claim, the order should be made only where the claim obviously has no merit, bearing in mind the difficulties of making that assessment at the interlocutory stage. Where the choices are, on one hand, al­lowing an unmeritorious claim to go to trial and, on the other, stifling a possibly meri­torious claim before trial, the policy of our law is clear. While there is a risk of injus­tice on either account, stifling a pos­sibly meritorious claim is the greater in­justice" - See paragraph 83.

Practice - Topic 8129

Costs - Security for costs - Application - Evidence - [See Practice - Topic 3666 ].

Practice - Topic 8144

Costs - Security for costs - Amount of security - Grounds for reducing amount of security - [See first Practice - Topic 8105 ].

Cases Noticed:

Waverley (Village Commissioners) et al. v. Nova Scotia (Minister of Municipal Affairs) et al. (1993), 123 N.S.R.(2d) 46; 340 A.P.R. 46 (S.C.), affd. (1994), 129 N.S.R.(2d) 298; 362 A.P.R. 298 (C.A.), leave to appeal denied (1995), 188 N.R. 320; 140 N.S.R.(2d) 240; 399 A.P.R. 240 (S.C.C.), refd to. [para 30].

Watts Estate et al. v. Contact Canada Tourism Services Ltd. et al. (1998), 212 A.R. 207; 168 W.A.C. 207 (C.A.), refd to. [para. 30].

ITN Corp. v. ACC Long Distance (1996), 67 C.P.R.(3d) 38 (Ont. C.A.), refd to. [para. 31].

Culzean Inventions Ltd. v. Midwestern Broom Co. et al., [1984] 3 W.W.R. 11; 31 Sask.R. 180 (Q.B.), refd to. [para. 39].

Sherman v. Giles (1994), 137 N.S.R.(2d) 52; 391 A.P.R. 52 (C.A.), refd to. [para. 44].

Crown Cork & Seal Canada Inc. v. Cobi Foods Inc. (1995), 137 N.S.R.(2d) 212; 391 A.P.R. 212 (C.A.), refd to. [para. 45].

Oceanus Marine Inc. v. Saunders (1996), 153 N.S.R.(2d) 267; 450 A.P.R. 267 (C.A.), refd to. [para. 45].

RJR-MacDonald Inc. et Imperial Tobacco Ltd. v. Canada (Procureur général), [1994] 1 S.C.R. 311; 164 N.R. 1; 60 Q.A.C. 241; 111 D.L.R.(4th) 385, refd to. [para. 46].

Coughlan et al. v. Westminer Canada Ltd. et al. (1993), 125 N.S.R.(2d) 171; 349 A.P.R. 171 (C.A.), refd to. [para. 46].

Dawson et al. v. Rexcraft Storage and Warehouse Inc. et al. (1998), 111 O.A.C. 201; 164 D.L.R.(4th) 257 (C.A.), refd to. [para. 47].

Motun (Canada) Ltd. et al. v. Detroit Die­sel-Allison Canada East (1998), 165 N.S.R.(2d) 217; 495 A.P.R. 217 (C.A.), refd to. [para. 52].

Launer v. Sommerfeld (1964), 48 W.W.R.(N.S.) 224 (B.C.S.C.), refd to. [para. 54].

John Wink Ltd. v. Sico Ltd. (1987), 57 O.R.(2d) 705; 15 C.P.C.(2d) 187 (Ont. H.C.), leave to appeal granted 22 C.P.C.(2d) 311 (Ont. H.C.), refd to. [para. 55].

Eastern Trading Co. v. Monchamp (1992), 114 N.S.R.(2d) 223; 313 A.P.R. 223 (S.C.), refd to. [para. 56].

Hallum v. Canadian Memorial Chiropractic College (1989), 70 O.R.(2d) 119 (H.C.), refd to. [para. 62].

MacDonald v. Lange (1986), 56 O.R.(2d) 89 (Dist. Ct.), refd to. [para. 63].

Petten et al. v. E.Y.E. Marine Consultants et al. (1994), 120 Nfld. & P.E.I.R. 313; 373 A.P.R. 313 (Nfld. T.D.), refd to. [para. 64].

Morris et al. v. Stuckless (1995), 143 N.S.R.(2d) 212; 411 A.P.R. 212 (T.D.), refd to. [para. 68].

LaRiviere v. Catalone Recreation Assoc. (1983), 57 N.S.R.(2d) 411; 120 A.P.R. 411 (S.C.), refd to. [para. 68].

Padnos v. Luminart Inc. et al. (1996), 21 O.T.C. 155; 32 O.R.(3d) 120 (Gen. Div.), refd to. [para. 69].

Porzelack KG v. Porzelak (UK), [1987] 1 All E.R. 1074 (Ch. D.), refd to. [para. 70].

Kropp et al. v. Swaneset Bay Golf Course Ltd. et al., [1997] 4 W.W.R. 306; 90 B.C.A.C. 170; 147 W.A.C. 170 (C.A.), refd to. [para. 74].

Pearson v. Naydler, [1977] 3 All E.R. 531, refd to. [para. 74].

Keary Developments Ltd. v. Tarmac Con­struction Ltd., [1995] 3 All E.R. 534 (C.A.), refd to. [para. 75].

Tweel v. Tweel (1997), 149 Nfld. & P.E.I.R. 186; 467 A.P.R. 186 (P.E.I.C.A.), refd to. [para. 76].

Franck Estate v. Webster, [1998] 8 W.W.R. 690; 129 Man.R.(2d) 87; 180 W.A.C. 87 (C.A.), refd to. [para. 77].

Warren Industrial Feldspar v. Union Car­bide (1986), 8 C.P.C.(2d) 1 (Ont. H.C.), refd to. [para. 80].

Rackley et al. v. Rice et al. (1992), 56 O.A.C. 349; 89 D.L.R.(4th) 62 (Div. Ct.), refd to. [para. 81].

Statutes Noticed:

Civil Procedure Rules (N.S.), rule 42.01, rule 42.02 [para. 51].

Authors and Works Noticed:

Annual Practice (1999), p. 428 [para. 49]; order 23, rule 1 [para. 70].

Carthy, J.J., Millar, Derry, and Cowan, Jeff, Ontario Annual Practice, 1998-1999, rule 56 [para. 49].

Orkin, Mark, The Law of Costs (2nd Ed. 1998), s. 503 [para. 54].

Supreme Court Practice - see Annual Prac­tice.

Whitebook - see Annual Practice.

Williston, W.B., and Rolls, R.J., The Law of Civil Procedure (1970), vol. 1, p. 573 [para. 60].

Counsel:

Kevin A. MacDonald, for the appellant;

William L. Ryan, Q.C., and John E. Mac­Donell, for the respondents, Haney, Abbott, Haney and Werner;

John C. Cotter, for the respondents, Horn Abbot Ltd. and 679927 Ontario Ltd.

This appeal was heard on January 5, 1999, before Bateman, Flinn and Cromwell, JJ.A., of the Nova Scotia Court of Appeal. The following judgment of the Court of Appeal was delivered by Cromwell, J.A, on April 15, 1999.