Court of Appeal for Ontario

Date: 2019-03-01 Docket: M50142 (C66435) Motion Judge: Lauwers J.A.

Between

Melrose Property Development Inc. Appellant (Plaintiff) Responding Party

and

Royal Bank of Canada, BDO Dunwoody Limited, and Platinum Asset Services Inc. Respondents (Defendants) Moving Parties

Counsel

J. Ross Macfarlane, for the moving parties

Marek Z. Tufman, for the responding party

Heard: February 26, 2019

Reasons for Decision

[1] The Respondents, the Defendants in the action, succeeded in a summary judgment motion before McEwen J. of the Superior Court of Justice, who dismissed the claim. They seek security for costs on the appeal launched by the responding party.

[2] The claim arises out of the sale of certain coating equipment by the moving parties during a bankruptcy proceeding. The responding party asserted that it owned the disputed equipment, not the bankrupt, and claimed damages.

[3] While the trial judge was unable to resolve the issue of possession of the disputed equipment on the evidence, he was able to determine its ownership, and on that basis granted summary judgment. He said:

Based on the evidentiary record before me, there is no credible and reliable evidence to support Melrose's position that it owned the equipment. The only evidence in this regard of any significance is the bald affidavit evidence of Mr. Rosso, which is unsupported by the documentation, and undermined by the fact that he did not answer undertakings concerning ownership.

[4] The notice of appeal sets out four grounds, all of which amount to challenges to the motion judge's findings of credibility.

[5] The basis of the motion for security of costs is, in particular, rr. 61.06(1) and 56.01(1)(d) and (e) of the Rules of Civil Procedure. Rule 61.06 gives this court authority to require security for costs where an order can be made under r. 56.01. Rule 56.01(1)(d) provides that an order for security for costs may be made where "the plaintiff or applicant is a corporation or a nominal plaintiff or applicant, and there is good reason to believe that the plaintiff or applicant has insufficient assets in Ontario to pay the costs of the defendant or respondent." Further, the moving parties claim that the appeal is frivolous and vexatious under r. 56.01(1)(e).

[6] Counsel for the moving parties cited General Products Inc. v. Actiwin Company Limited, 2015 ONSC 6923, where Lemon J. said at para. 18:

The plaintiff corporation has a higher onus to demonstrate a sufficiency of assets "by convincing evidence." This includes information and supporting documentation as to the current status of its assets and liabilities, particularly liabilities secured against those assets put forward as available to pay a judgment for costs.

[7] Counsel points out that the affidavit of Mr. Rosso is thin and sparse. The financial statement attached lacks detail and, on its face, demonstrates a declining net position over several years. The statement is dated January 31, 2017. There is no evidence regarding 2018, and Mr. Rosso deposes only that "no substantial changes have taken place with respect to such assets and liabilities during 2019." There is no detail at all about the corporation's assets and where they are located.

[8] As for the merits of the appeal, counsel for the moving parties point to Szpakowsky v. Kramar, 2012 ONCA 77, at para. 14 where this court said:

It 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.

See also Schmidt v. Toronto-Dominion Bank (1995), 24 O.R. (3d) 1, at para. 5.

[9] The appeal in this case is entirely factual. Counsel for the responding party has put nothing before the court beyond the bald assertions of his client to show that there is any basis for the finding that the motion judge made a palpable and overriding error.

[10] Counsel for the appellant seeks an order for costs in the amount of $54,000 comprised of $35,000 awarded by the judgment under appeal, and a projected $19,000 figure for the appeal before this court.

[11] Given the manifest lack of merit in the appeal, I order the responding party to post security for costs in the amount of $54,000, $35,000 relating to the judgment under appeal and $19,000 relating to the appeal itself. The costs are to be posted by March 29, 2019. Costs of this motion are fixed in the amount of $2,500 all-inclusive payable by the responding party to the moving parties forthwith.

P. Lauwers J.A.