Supreme Court

I N THE SUPREME COURT OF THE NORTHWEST TERRITORIES B E T W E E N : >

TOBITRON LIMITED

PLAINTIFF (RESPONDENT)

- and -H. GUY SCHNEIDER

Application for security for costs. 1 Application heard July 7th, 1978 at Yellowknife, N.W.T Judgment of the Court filed: July 12th, 1978. Appli cati on all owed . Reasons for Judgment by The Honourable Mr. Justice C,F, Tallis Counsel on the Hearing: Mr. J. Edward Richard, for the Applicant Defendant Mr. E. Brogden for the Respondent '̂l!'* Plaintiff ^

'oC CIV 1 8 o w

DEFENDANT (APPLICANT)

IN THE SUPREME COURT OF THE NORTHWEST TERRITORIES B E T W E E N TOBITRON LIMITED

- and -H. GUY SCHNEIDER

J. Edward Richard for the Applicant E. Brogden for the Respondent REASONS FOR JUDGMENT OF THE HONOURABLE MR. JUSTICE C.F. TALLIS

This is an application for security for costs. The application initially came on for hearing before me on May 29th, 1978. Several adjournments were granted in order to give the respondent plaintiff an opportunity to cross examine the applicant defendant on his affidavit. The application was argued on July 7th, 1978. The respondent plaintiff did not file any material on this application. In this particular case the applicant defendant has filed a statement of defence and counterclaim. No defence has been filed to the counterclaim. I have carefully considered the affidavit evidence of the applicant defendant and after considering this evidence I am

PLAINTIFF (RESPONDENT)

DEFENDANT (APPLICANT)

^m ••Bl satisfied that the applicant has complied with the requirements of Rules 593 and 594. Learned counsel for the applicant indicated that he w also relying on the provisions of section 191 of the Companies Ordinance R.O.N.W.T. 1974, chapter 7 which provides as follows: "191. Where a company is plaintiff in any action or other legal proceedings, the court may, if it appears by credible testimony that there is reason to believe that the company will be unable to pay the costs of the defendant if successful in his defence, require sufficient security to be given for those costs, and may stay all proceedings until the securi ty is gi ven ."

There is no evidence before me to support an applicat under section 191 of the Companies Ordinance. On the evidence adduced I am satisfied that the respondent plaintiff has no assei or property within this jurisdiction that will be available for the defendant's costs. It is significant that the respondent plaintiff did not file any affidavit evidence in opposition to tl application. The respondent plaintiff, Tobitron Limited, was incorporated in the Province of Alberta on the 30th day of June, A.D. 1975. Thd director of the company is one John Hopwood of Suite 408, 1016^9 104th Street, Edmonton, Alberta. The head offii or chief place',of business of the company in Alberta is at the above address. The^respondent plaintiff was registered extra-territoi in the Northwest Territories pursuant to the provisions of the I)' '̂ "̂ II

Companies Ordinance on February 1 5 t h , 1977. mere f a c t that7>the company i s r e g i s t e r e d e x t r a - t e r r i t o r i a U y m (

In my o p i n i o n , the ^ ^

the Northwest Territories does not preclude the court from making iW an order for security for costs. In this connection I refer to

the following, inter alia, authorities: Frost and Wood Co. v. Lewis (1912) 2 W.W.R, 321; LaSalle Extension University v. Linley (1933) 2 W.W.R, 288; Canada Railway Accident Co, v, Kelly (1907) 5 W.L.R, 412; Northwest Timber Co. v. McMillan (1886) 3 M.R, 277, I adopt with respect the approach of Marriott (Senior Master) in Buckeye Incubator Co, v. Rice Construction Co, Ltd, (1963) 2 O.R, 195 at pages 196 to 197 where the learned senior master stated as follows : "The statement of claim alleges that the plaintiff carries on business within Ontario and else­where and that it has its head office in Springfield, Ohio. However, there is no material filed on this application to support the allegation that it carries on business in Ontario. On the other hand in the ) affidavit of William C. Lawrence filed on behalf of the defendant it is stated that other than for the sale of the goods in question in this action and certain other deliveries of goods to Canada which were manufactured in the U.S. the plaintiff has not at any relevant time carried on business within Ontario and that it has not had an office within Ontario. It further appears that any business carried on by the plaintiff here has been through an agent in St. Thomas, and it has no assets of a permanent nature here.

The pi ai ntiff is the holder of an extra-provincial licence pursu ant to the provisions of the Corporations Act R.S. 0. 19 60, c. 71. The registered office in Ontari o appea rs to be the office of a Toronto firm of s 01 i c i 10r s . It further appears that from inquiries that hav e bee n made in Springfield, Ohio, as to the f i n a n c i a1 pos ition of the plaintiff that it has sold its m a n uf actu ring business to Buckeye Mfg. Co., a c o m p l e t e ly un related organization; that the plaintiff has reta i ned only its accounts receivable and payable and cert ai n 1 ands and premises and that the Buckeye M f g . C o . i s pr esently suing the plaintiff for a p p r o x i m ately $100,000 in California and that there are seve ral u nsatisfied judgments against the plaintiff in O h i o .

0

Under these circumstances notwithstanding the fact that the plaintiff is registered under the extra-provincial corporations section of the Corporations Act, in my view for the reasons to be given the plaintiff cannot be said to reside in Ontario within the meaning of the Rule. In Ashland Co. v. Armstrong ( 1 9 0 6 ) , 11 O.L.R, 414 in a somewhat similar case Boyd, C , in* effect held that by itself registration under the then provisions of the Extra-Provincial Corporations Act did not constitute the company as an Ontario resident. The headnote to that case is as fol1ows

'In ord er to s hew t hat a corpor a t i 0 n re s i de s in Ont ario (w i t h i n the m ean i ng of Ru le 11 9 8 ) , it sh0 uld app ear t hat th e comp any is i nco rporate and ha s its h ead a nd con trolli ng off ice w i thin the ju r 1 s d i c ti on w here i ts bus i n e s s i s ca rried on, an d 'resi dence ,' as con tern piated by t he practi ce as t 0 sec uri ty for CO sts, i s not implie where a forei gn CO rporat ion ha s only a CO nstruct resi de nee thr ough agents acti n g in i ts bu s i n e s s i nte re sts and 1 i cen sed s 0 to d 0 in a comp arative small and tra nsi en t sort of wa V, as were the plaint i f f s in this acti 0 n; an d the e V i d en ee not d i s c 10s ing su ffici ent pr operty of th e pla intiffs within the j ur i sdi cti on, they were o rdere d to gi securi ty for costs Co unsel for th e pi ain tif f CO ntends t hat by r easo of the change s made to th e Co rpor ati ons A c t sine e the Ashiand case , i t ca n no 1 onge r be consi de red to be a bi ndi ng autho rity 0 n the poi nt , a nd it th ere fo re does represe nt the moder n orac ti ce . A fter rea di ng ss . 346 and 356 of th e Corp 0 r a t i 0n s A Ct , R.S.O. 1 960, c. 71 a Regulat ion 61 (47) 0 f 1960 , ma de t hereunde r , refe rred by coun sel I am not satis fied the y effect any ch ange in the p r i n c ip ie f0 11 owed in the Ashland case ap plica to this case . The requi re men t th at the c ompany is to appoi nt an at torney to re pres ent it here w i t h ce r ta in obii gat i ons a n d rig hts do es n O t a Iter the pi ai nt i f f ' s posi ti 0 n i n th e sen se tha t it mak es it be t t e r ab le to satisfy a jud gmen t for CO sts . I n the la t e s t ed i t ion of Fras er & S tewart , Comp any Law, 5 th e d . , p. 84 i t i stated that 'The h o l d i n g of a li c e n c e or regi s t r a t i o n does not make that c o m p a n y a r e s i d e n t in the jurisdic so as to a b s o l v e it from g i v i n g security for cos

- 5 -I In addition to the Ashland case many other and k more recent Canadian cases are cited in support of this statement. It may be that where a foreign corporation has a permanent office within the Province and is in a substantial way of business here, the Court would hold that it resides here without going too deeply into its financial position: Frost & Wood Co. v. Howes (1912). 4 D.L.R. 526, at p. 528, but I think it is to be deduced from the authorities that in general the basic test to be applied is whether the foreign corporation has assets within the jurisdiction sufficient to satisfy any judgmen^t mâ de against it for costs. Re Apollinaris Co. , /189y 1 Ch. 1, LaSalle Ext. University y:. Linley, 71933^3 D,L,R, 643, at p, 646,"

Applying the above principles to this application I accordingly find that this is an appropriate case for an order for security for costs. As to the amount of security I find that $900.00 would be appropriate having regard to all the circumstances. I therefore order that the respondent plaintiff do within liii three months from the service of this order give security for the defendant's costs of this action in the amount of $900.00 by payment thereof to the Clerk of the Court or by bond therefore given to the defendant and approved by its solicitors or by the Court. I further order that, until the said security for costs is given, all further proceedings in this action are stayed. In default of such security being given within the time above limited, the respondent plaintiff's action herein shall stand dismissed with costs without further order, unless the Court on special application otherwise directs. The costs of and incidental to this application shall be costs in the cause. DATED AT Yellowknife, in the Northwest Territories, this secoi 10th day of July, A.D. 1978. y- /- _̂ f / C.F. TALLIS J.S.C. ^ ^

^m NO SC 4 2 8 4 I N THE SUPREME COURT OF THE NORTHWEST T E R R I T O R I E S B E T W E E N : TOBRITON LIMITED P L A I N T I F F (RESPONOE

and

H . GUY SCHNEIDER DEFENDANT (APPLICAN

REASONS, FOR JUDGMENT OF HONOURABLE MR, JUSTICE C , F , T A L L I S .Jd