Court of Appeal of Ontario

Lana International Ltd. v. Menasco Aerospace Ltd.

Date: 2000-04-07

Victor T. Bulger, for appellants.

Bradley E. Berg, for respondent, John Cybulski, moving party.

Court File Nos. C33354; M25646

The judgment of the court endorsed on the appeal record was as follows

[1] Charron J.A.:—The respondent John Cybulski moves for an order for security for costs pursuant to rules 61.06(1)(b) and 56.01(1)(d) of the Rules of Civil Procedure. There is no doubt that the plaintiffs in this action are corporations and that there is good reason to believe that they have insufficient assets in Ontario to pay the costs of the defendant John Cybulski within the meaning of rule 56.01(1)(d). Indeed, three separate orders were made in the action below totalling security in the amount of $1,000.000 with respect to the various defendants, including the respondent John Cybulski.

[2] The action against the respondent Cybulski was dismissed by way of summary judgment [reported 1999 14883 (ON SC), 181 D.L.R. (4th) 534]. An appeal is taken from that judgment and it is scheduled to be heard on May 17, 2000. The action against the remaining defendants is scheduled to proceed in the Fall.

[3] Although the respondent Cybulski can look to the security that is already posted with respect to his costs in the proceedings below, it is common ground between the parties that the orders below do not provide for security for costs in the appeal. It is for that reason that the respondent seeks a further order of this court for security of his costs in the appeal.

[4] The appellants submit, and correctly so, that although the criteria under rule 56.01(1)(d) are present in this case, an order should only be made where it is just to do so. The appellants argue that it would not be just to make an order for further security for costs because the respondent is not at risk for payment of his costs on appeal. In support of this argument, the appellants rely on the strength of their appeal and on the fact that the appellants are unlikely to conduct themselves in any manner that may jeopardize the action scheduled to proceed next Fall.

[5] I am not persuaded by this argument. Although the appeal is certainly not frivolous, the respondent's position is also not without merit. If the appeal should be unsuccessful, I find that the respondent Cybulski would be at risk for payment of his costs. The appellants could pay Mr. Cybulski's costs incurred below so as not to jeopardize their position in the action but not pay his costs for the appeal. In that event, Mr. Cybulski would have to seek a remedy against non-resident parties who have no assets in the jurisdiction. No argument was made that the appellants would suffer any prejudice by the making of an order. In all the circumstances, I find that it would be just to make an additional order for security for costs of the appeal.

[6] The respondent Cybulski has requested in the proceeding below that costs be awarded on a solicitor-client scale. That matter has not yet been determined by the summary motions judge. He requests that the costs be assessed on the same scale on appeal essentially for three grounds: (a) he submits that the appellants have sued him on the basis of no evidence whatsoever; (b) he submits that they have improperly alleged fraud and other misconduct on his part; and (c) he alleges that there have been numerous delays in the proceedings below.

[7] In my view, these arguments are more germane to the award of costs in the proceeding below. Although they are still relevant to the award of costs that may be made in this court, the ultimate determination of the merits of the appeal will also have an important bearing on this issue. It is my view that this appeal is not frivolous and presents a serious issue to be determined; hence, I am not prepared to grant an order for costs at the scale of solicitor-client.

[8] A further issue is taken by the appellants as to the quantum of the award that is requested. I am satisfied from the material before me that although this appeal is as to a summary judgment only, it involves a matter of some complexity. I would therefore make an order that the appellants post security for costs in the amount of $20,000 on or before April 28, 2000, in a form acceptable to the respondent. Failing the posting of this security, the respondent shall be at liberty to move before this court for the dismissal of the appeal.

[9] The respondent shall have his costs of the motion in the appeal.

Order accordingly.