Court of Appeal for Ontario

Date: September 19, 2019

Docket: M50320 (C66522)

Panel: Hoy A.C.J.O., Lauwers and Jamal JJ.A.

Between

FoodInvest Limited Plaintiff (Appellant/Moving Party)

and

Royal Bank of Canada Defendant (Respondent/Responding Party)

Counsel:

• Glenroy Bastien, for the moving party
• Catherine Francis, for the responding party

Heard: September 9, 2019

Reasons for Decision

[1] The corporate appellant brings two motions, identified as M50320 and M50386. The court's records and the appellant's materials are difficult to follow, but we conclude that, in substance, the appellant asks this court to: (1) review the March 28, 2019 order of Tulloch J.A. which, among other things, granted the respondent Bank security for costs; (2) review the May 9, 2019 order of Benotto J.A. dismissing the appellant's motion for a further extension of time in which to perfect its appeal; and (3) set aside the Registrar's order of May 23, 2019 dismissing this appeal for delay.

[2] For the following reasons, we would set aside the order for security for costs and related order as to costs of Tulloch J.A., the order of Benotto J.A., and the Registrar's dismissal of the appeal, and grant the appellant a final extension of time to perfect the appeal.

Background

[3] We provide some brief background before turning to the orders at issue. In the underlying action, the appellant alleged, among other things, that the Bank was negligent because it failed to notify the appellant that it had been advised by the Polish bank to which it had wired funds, at the appellant's request, that the Polish bank suspected fraud in relation to the wire transfers.

[4] On December 27, 2018, Morgan J. granted summary judgment dismissing the appellant's action against the Bank. He concluded that the Bank did not owe the appellant a duty of care to advise of the Polish bank's suspicions about illegality being carried out by the counterparties. Further, he found that if the Bank owed the appellant a duty of care in respect of the information it received from the Polish bank, in the absence of expert evidence from the appellant as to the standard of care, the appellant could not prove negligence.

Order of Tulloch J.A.

[5] In bringing its motion for security for costs, the Bank relied primarily on r. 61.06(1)(a) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. That provision permits a judge of this court to, on motion, make such order for security for costs of the proceeding and of the appeal as is just where it appears that (1) there is good reason to believe that the appeal is frivolous and vexatious; and (2) that the appellant has insufficient assets in Ontario to pay the costs of the appeal.

[6] In his endorsement, Tulloch J.A. indicated that he was ordering security for costs because he was satisfied that the appellant did not have sufficient funds in Ontario to pursue the appeal. But he did not find that there was good reason to believe that the appeal was frivolous and vexatious.

[7] The appellant, which was not represented by counsel, did not spell out its grounds of appeal in its Notice of Appeal. The appellant retained Mr. Bastien to attend on this motion, which was of great assistance to the court. Mr. Bastien explains that the appellant argues that there is a genuine issue requiring a trial. The appellant says that Morgan J. erred in finding that a bank is not required to notify its customer when it is told by another bank that it suspects that the party with which the customer is doing business is engaging in a fraud and that expert evidence is not required in such circumstances. We reject the Bank's argument that this is a frivolous and vexatious appeal. In our view, r. 61.06(1)(a) is not a basis for this court to award security for costs.

[8] To the extent that the respondent Bank relies on rr. 61.06(1)(b) and (c) and r. 56.01(1)(d), the appellant is a corporation, and, based on the materials that the Bank filed before Tulloch J.A., we agree with him that there is good reason to believe that the appellant has insufficient assets in Ontario to pay the costs of the respondent. However, Tulloch J.A. did not consider the justness of the order sought in all the circumstances of the case, with the interests of justice at the forefront. Even where the other provisions of rr. 56 or 61 have been met, the failure to consider the justness of the order holistically, examining all the circumstances of the case and guided by the overarching interests of justice to determine whether it is just to make an order for security for costs constitutes an error in principle: see Yaiguaje v. Chevron Corporation, 2017 ONCA 827, 138 O.R. (3d) 1, at paras. 22, 25; Pickard v. London Police Services Board, 2010 ONCA 643, 268 O.A.C. 153, at para. 17; Ravenda Homes Ltd. v. 1372708, 2017 ONCA 556, at para. 4. Accordingly, it falls on this panel to consider the justness of the order for security for costs sought.

[9] In all the circumstances, we consider that the justice of the case required the court to permit the appellant to perfect its appeal before considering if security for costs were warranted.

[10] Tulloch J.A. ordered security for costs in the amount of $75,067.89, which was the sum of the costs order in the amount of $50,067.89 below plus estimated costs of the appeal of $25,000. While he made a very significant award for security for costs, he also granted the appellant an extension of time to perfect its appeal. Orders for security for costs are designed to be protective in nature: Yaiguaje, at para. 23. The respondent was not required to incur any expenses to respond to the appeal until after the appellant perfected its appeal. In other words, it is unclear that the respondent required protection at the time it brought its motion. The self-represented appellant had not filed any materials in response to the Bank's motion for security for costs and, as indicated above, its Notice of Appeal did not specify its grounds of appeal. Having granted the self-represented appellant an extension, the interests of justice required that the respondent's motion not be considered until the motion judge was able to consider such materials as the appellant might file and assess the merits of the appeal with the assistance of those materials. This is particularly so given the significant amount of security for costs sought by the Bank and the seeming likelihood that such an order would effectively prevent the appellant from exercising its right of appeal.

[11] Accordingly, we set aside the order of Tulloch J.A. for security for costs and his related costs award, without prejudice to the Bank renewing its motion for security for costs after the appellant has perfected its appeal. If the time permitted for the appellant to do so has expired and the appellant has not perfected its appeal, there will presumably be no need for the Bank to renew its motion.

The Orders of Benotto J.A. and the Registrar

[12] In denying the appellant a further extension of time to perfect its appeal beyond that ordered by Tulloch J.A., Benotto J.A. relied in part on the fact that the appellant had not complied with the order of Tulloch J.A. to pay security for costs. In our view, the appellant's non-compliance with an order that we conclude must be set aside affected the outcome of the motion before Benotto J.A. and requires us to consider de novo the issue of whether a further extension of time should be granted.

[13] The appellant served its Notice of Appeal on January 28, 2019 and filed it on February 6, 2019, within the time frames required by rr. 61.04(1)-(4). Rule 61.09(1) required it to perfect its appeal within at most 60 days after filing its Notice of Appeal, depending on whether transcripts were required. Here, summary judgment was granted based on a written record, so transcripts are presumably not required. Accordingly, the delay in perfecting its appeal prior to Benotto J.A. denying the appellant a further extension of time was two months. Although the appellant offered little explanation for its delay in its materials, from the review of the record, we infer that the lack of counsel has been a significant cause of the delay. Mr. Bastien advised the court that he has a limited retainer in respect of these motions, but believes he will be retained on the appeal if these motions are granted.

[14] We are not persuaded that any prejudice to the Bank has arisen from the appellant's delay in perfecting its appeal. Further, having reviewed the reasons of Morgan J., and with the assistance of Mr. Bastien, we conclude that this is not a case where the appeal has so little merit that the court could reasonably deny the important right of appeal.

[15] We conclude that the justice of the case requires a further, and final, extension of time to October 21, 2019 to perfect the appeal. Accordingly, we also set aside the order of Benotto J.A., including her order as to costs. Having set aside her order and granted a final extension, the Registrar's order of May 23, 2019 is also set aside.

Costs

[16] The appellant has filed deficient materials and sought indulgences from the court. In the circumstances, no costs are ordered on these motions.

"Alexandra Hoy A.C.J.O."

"P. Lauwers J.A."

"M. Jamal J.A."