COURT OF APPEAL FOR ONTARIO
Weiler, Sharpe and Blair JJ.A.
BETWEEN
Lidia Yvonne Szpakowsky
Appellant (Plaintiff)
and
Robert Michael Kramar, Lee Edward Fingold, Evlar Investments Ltd., Jorum Gold, Grant Rayner Lawrence Ben Eliezer, George B. Callahan, Jerry Herzkopf
Respondents (Defendants)
Jeffrey Langevin, for the appellant
H.J. Doan, for the respondent
Heard: January 31, 2012
On appeal from the order of Justice Harrison.S. Arrell of the Superior Court of Justice, dated April 29, 2011.
ENDORSEMENT
Overview
1Mr. Gold seeks an order requiring the appellant to post security for costs pending the disposition of her appeal from the order of Arrell J. dated April 29, 2011, dismissing her action as against him and the defendant Fingold, for delay.
2How a motion for security for costs, in this battle infused with ill will in all corners, came to be dealt with by a full panel of the Court is a somewhat tortuous story. Suffice it to say, that a motion for security for costs was granted by Juriansz J.A. on September 6, 2011, when no one attended on behalf of the appellant. Why that was so, is hotly contested, but a panel of this Court set aside that order on November 22 on the basis that it had been granted on the misunderstanding that the motion was unopposed. The panel said:
This misunderstanding arose because Mr. Langevin did not appear on the motion nor did anyone send any correspondence to the court. He advises this was because he expect Mr. Doan to obtain an adjournment for him. The approach of both counsel led to the need for this attendance today.
3The order of Juriansz J.A. was set aside on terms that Ms. Szpakowsky pay costs thrown away before Juriansz J.A. and costs before the panel in the amount of $3,000, that materials be exchanged before certain dates, and that a companion motion to quash brought by Mr. Gold be argued with the appeal itself. When the matter came on before this panel on January 31, 2012, it was not clear whether we were to deal with the motion for security for costs, the motion to quash or the appeal, or all of the foregoing. As it turned out, the parties thought they were here to argue the motion for security for costs and expected that argument to take place before a single judge. Because the matter was already before us, and because of the history of this proceeding as outlined above and below, we decided to deal with the motion for security for costs.
4A brief outline of the entire history of these proceedings may be helpful at this point.
5In the late 1980’s, Ms. Szpakowsky held a number of investment properties in and around the City of Toronto. The defendants – described by Arrell J. as “a compilation of disbarred lawyers, lawyers still practicing and one estranged lover” – were her financial and legal advisors in various capacities. Mr. Gold, it should be said, is one of those disbarred lawyers (Mr. Fingold is not), although it does not appear from the record that his disbarment was in any way related to his dealings with Ms. Szpakowsky. In summary, Ms. Szpakowsky alleges that because of the diverse misdeeds of the defendants, she lost her investments.
6In August, 1988 she commenced an action claiming damages for these losses. Mr. Gold was not a defendant in that action, although Ms. Szpakowsky acknowledges that she was aware of her allegations against him by at least that time. That action was dismissed for delay in 1992.
7In October, 1993, Ms. Szpakowsky commenced a second action raising essentially the same allegations and this time adding her first lawyer, Mr. Rayner, as a defendant, but again asserting no claim against Mr. Gold. The second action was dismissed for delay in May, 1998.
8Almost six years later, in March 2004, Ms. Szpakowsky issued her third statement of claim, again raising essentially the same allegations, but this time – at least 16 years after the events complained of – adding Mr. Gold as a defendant. Even at that, although the proceedings moved along against the other defendants, Mr. Gold was not served with the new statement of claim for another 3 ½ years, in November 2007. The explanation advanced for the delay in service is that Mr. Gold could not be found and was, in fact, incarcerated, for part of that time. However, as Arrell J. pointed out, the record indicates that Mr. Gold has lived at the same address since 1994.
9Earlier, in July, 2006, Milanetti J. had ordered that the claim be amended, issued and served by September 8, 2006, and that the trial record be passed by April 2007. None of this was done, and Mr. Gold was not served in accordance with the order.
10The allegations against Mr. Gold were based in negligence, fraud and breach of fiduciary duty. He retained counsel and quickly moved to strike the claim as against him. On January 4, 2008, Ms. Szpakowsky agreed to amend her claim forthwith and to delete all allegations against Mr. Gold except for breach of fiduciary duty. She has never done so.
11In late 2010, Mr. Gold and Mr. Fingold moved for summary judgment to strike the claim against them. Arrell J. granted that order. He did so not only because of Ms. Szpakowsky’s failure to comply with certain court orders and the delay and the normal difficulties associated with such delay (the case was then 23 years old), but because he found that Mr. Gold has suffered significant and real prejudice because he had destroyed his files after 15 years and well before being advised of the lawsuit and because three potentially important witnesses had died in the interim.
Discussion
12Mr. Gold seeks an order for security for costs in the total amount of $43,516.62, representing $25,000 in relation to the pending appeal together with an amount to secure the sum of $18,516.62 awarded by Arrell J. as costs of the motion to dismiss for delay. He relies essentially on the provisions of rules 61.06 and 56.01 that permit the Court to order security for costs where there is good reason to believe the appeal is frivolous and vexatious and the appellant has insufficient assets in Ontario to pay the costs of the appeal, and where there are outstanding orders of costs in favour of the moving party that have not been paid by the appellant. He also requests an order lifting the stay pending appeal regarding the costs of the proceedings before Arrell J., if necessary, and directing that those costs be paid forthwith.
13We would not grant the latter request, but we order that the appellant post security for costs of the appeal in the amount of $15,000. We do so for the following reasons.
14It is not necessary for these purposes that we be satisfied the appeal is in fact without merit and frivolous, vexatious or otherwise an abuse of the process. It is sufficient if it appears to us that there is good reason to believe it has those characteristics. As this Court noted in Schmidt v. Toronto-Dominion Bank (1995), 1995 CanLII 3502 (ON CA), 24 O.R. (3d) 1, at p. 5:
The words “good reason to believe” qualify the words “frivolous and vexatious” and indicate a finding short of an actual determination that the appeal is frivolous and vexatious. A judge hearing a motion for security for costs may reach the tentative conclusion that an appeal appears to be so devoid of merit as to give “good reason to believe that the appeal is frivolous and vexatious” without being satisfied that the appeal is actually devoid of merit.
15In our view, given the history and circumstances outlined above, Ms. Szpakowsky’s appeal is caught by these criteria.
16As for the second part of the rule 61.06(1)(a) – good reason to believe that the appellant has insufficient assets in Ontario to pay for costs of an appeal – Ms. Szpakowsky asserts that she is an impecunious appellant and, therefore, there is no issue with respect to that aspect of the test.
17We are aware of the jurisprudence that cautions courts – on access to justice grounds – against depriving an impecunious litigant of his or her right to have a meritorious claim determined on the merits. But, as noted above, we have grave reservations about the merits of the appeal, which appears to us to have little prospect of success. Impecunious litigants are not entitled to proceed in such circumstances with impunity – causing their opponents to incur significant costs themselves – and without having to face the normal consequences of costs in they are unsuccessful.
18In addition to the foregoing, Ms. Szpakowsky has a history of failing to comply with costs orders and with other court orders in the proceedings. While we would not grant security for costs based on these factors alone, they serve to reinforce our conclusions respecting the apparent frivolous and vexatious nature of the appeal.
19In the end, it is what is in the interests of justice that governs. What is required is an appropriate balance between Mr. Gold’s entitlement, in the circumstances, to some protection in terms of costs and a disposition that will not have the effect of precluding Ms. Szpakowsky from proceeding for all practical purposes. For that reason, we are not prepared to accept Mr. Gold’s request that we make an order for security for costs in the amount of more than $43,000. We think that an order requiring the appellant to post the total sum of $15,000 as security for costs of the appeal and the motion before Arrell J. strikes the appropriate balance in all the circumstances.
Disposition
20We therefore order that Ms. Szpakowsky pay the sum of $15,000 into court to the credit of this action as security for the costs of the appeal and the proceedings before Arrell J. The appeal is stayed pending compliance with this order.
“K.M. Weiler J.A.”
Robert J. Sharpe J.A.”
“R.A. Blair J.A.”
