Court of Appeal for Ontario

Date: 2019-09-17

Docket: M50771 (C65298)

Motion Judge: Lauwers J.A.

Between

Janet Louise Hilson Plaintiff (Respondent) Appellant by way of cross-appeal Moving Party

and

1336365 Alberta Ltd., 1336367 Alberta Ltd., 1336364 Alberta Ltd., 1320950 Alberta Ltd., 1336366 Alberta Ltd., Ross Charles Lightle and Barbara Lightle Defendants (Appellants) Respondents by way of cross-appeal Responding Parties

Counsel

Howard W. Reininger, for the moving party

Jonathan Rosenstein, for the responding parties

Heard: September 13, 2019

Reasons for Decision

[1] The moving party and the respondent in this appeal, Janet Louise Hilson, seeks an order for security for costs from the appellants, Ross Charles Lightle and Barbara Lightle, under r. 61.06(1)(a) and (c).

[2] The context is set by the decision of the trial judge, Lococo J. of the Superior Court of Justice, in which he granted judgment against the personal respondents, the Lightles, in the sum of $723,479.66 plus interest at the rate of 12 percent per annum from July 3, 2012. His reasons for decision were issued on March 26, 2018 and are reported at 2018 ONSC 1836. This court heard the appeal on November 15, 2018, but the decision issued by the court on May 27, 2019 was withdrawn and the matter is set to be reargued on October 30, 2019. The moving party did not seek an order for security for costs before the first appeal hearing.

[3] Rule 61.06(1)(a) and (c) provide:

(1) In an appeal where it appears that,

(a) there is good reason to believe that the appeal is frivolous and vexatious and that the appellant has insufficient assets in Ontario to pay the costs of the appeal;

(b)…[or],

(c) for other good reason, security for costs should be ordered,

a judge of the appellate court, on motion by the respondent, may make such order for security for costs of the proceeding and of the appeal as is just. ...

(2) If an appellant fails to comply with an order under subrule (1), a judge of the appellate court on motion may dismiss the appeal.

[4] The principles applicable to this motion are set out in Groia & Company Professional Corporation v. Cardillo, 2019 ONCA 165, at paras. 4-7.

[5] To grant an order for security for costs under r. 61.06(1)(a), the motion judge must: (a) have good reason to believe the appeal has no merit and is therefore frivolous and vexatious, and (b) have good reason to believe the clients have insufficient assets in Ontario to cover the costs of the appeal: Schmidt v. Toronto-Dominion Bank (1995), 24 O.R. (3d) 1, at para. 15. As this court observed in Schmidt, at para. 16: "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 totally devoid of merit."

[6] Considering r. 61.06(1)(a), I am unable to conclude that the appeal has so little merit that it reaches the threshold of being frivolous and vexatious. The appellants note that the main legal issue was left open by this court's predecessor in Martin v. Youngson, 55 O.L.R. 658, [1924] O.J. No. 77 (C.A.), at para. 20:

Dealing now with the successive points argued by the appellant, I think that this is "an action upon a covenant contained in an indenture of mortgage," and therefore comes within sec. 49, subsec. 1(k), of the Limitations Act. The whole document, exhibit 1, is an indenture of mortgage. I express no opinion as to what would be the proper conclusion if the guaranty were contained in a separate collateral document. That point can be decided when it arises. But, so far as this action is concerned, it seems to me that it falls precisely within the words of the statute, and therefore that the period of limitation is 10 years, and not 20. [Emphasis added.]

[7] Since this is the very question of law to be addressed in the appeal, I venture no opinion on the merits, nor have I read the withdrawn decision, despite the appellants' encouragement to do so. It is utterly without weight in this calculus.

[8] With respect to r. 61.06(1)(c), Strathy C.J.O. pointed out in Henderson v. Wright, 2016 ONCA 89, 345 O.A.C. 231, paras. 27 and 28:

Appellate courts in Ontario have ordered security for costs when an appeal has a low prospect of success coupled with an appellant who has the ability to pay costs but from whom it would be nearly impossible to collect costs.

This "good reason" balances the need to ensure an appellant is not denied access to the courts, with the respondent's right to be protected from the risk the appellant will not satisfy the costs of the appeal. [Internal citations omitted.]

[9] In Combined Air Mechanical Services Inc. v. Flesch, 2010 ONCA 633, 268 O.A.C. 172, Laskin J.A. added a gloss, at para. 8:

What constitutes "other good reason"? The court does not have a closed list of cases in which security for costs has been ordered under the residual category. The list of reasons justifying security under the residual category is open ended. However, the "other good reason" must be related to the purpose for ordering security: that a respondent is entitled to a measure of protection for costs incurred and to be incurred in the proceeding, which is now on appeal. And, the "other good reason" should be a fairly compelling reason, as the respondent cannot meet the requirements of either of the first two categories. Security for costs awards under the residual category are not to be made routinely.

[10] I accept that the moving party has made out a reason for the order sought, as noted by Laskin J.A., that is "related to the purpose for ordering security: that a respondent is entitled to a measure of protection for costs incurred and to be incurred in the proceeding, which is now on appeal." While the evidence of the appellants' effort to escape liability and to evade eventual enforcement of a judgment debt is not as strong on the evidence as in Groia, I am prepared to accept the moving party's assertion that the appellants have no assets in Ontario, and the hearsay evidence contained in the letter from her British Columbia counsel providing some information about the disposition of the appellants' assets there. The appellants tendered no evidence in response and I am prepared to draw an adverse inference that the moving party's assertions have merit.

[11] My difficulty is with the moving party's delay in bringing the motion. Delay is a relevant factor, as noted by Huscroft J.A. in Trillium Motor World Ltd. v. General Motors of Canada Ltd., 2016 ONCA 702, 2 C.P.C. (8th) 37, at paras. 31 and 35. The slim evidence adduced by the moving party relates to British Columbia transactions in 2011-2013. This was well known to the moving party and she did not bring a motion before the first appeal was argued. Counsel provides no explanation for the delay, but his emphasis on this court's withdrawn reasons leads to the inference that he is relying on the "low prospect of success" factor. But such an inference is not open to me.

[12] The authority to order security for costs is discretionary. The costs of the appeal have all been incurred except for the upcoming hearing on October 30, 2019, which will be a reprise of the earlier argument. In my view, at this late stage there must be good reason to disturb the status quo ante, but there is none.

[13] I therefore dismiss the moving party's motion for security for costs, with costs in the amount of $3,500 all-inclusive, to be paid to the responding parties in the cause.

P. Lauwers J.A.