Gaudette v. 1929853 Ontario Limited 2025 ONSC 1286

COURT FILE NO.: DC-24-2214

DATE: 20250303

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Angèle Gaudette, Appellant

AND:

1929853 Ontario Limited, Respondent

BEFORE: Regional Senior Justice P.J. Boucher

COUNSEL: Angèle Gaudette, on her own behalf

Sara Fretwell, for the Respondent

HEARD: January 27, 2025

ENDORSEMENT

Introduction

[1] The respondent moves for security for costs in this appeal from a decision of the Small Claims Court. The appellant opposes this request and seeks various declaratory orders as well as an order for certain accommodations.

Background

[2] In her Small Claims Court action, the appellant alleges the respondent damaged her motor vehicle during snow removal operations. On September 11, 2024, Deputy Judge Paquette granted a motion brought by the respondent and struck the appellant’s claim as statute barred. He also fixed costs of $500 against the appellant.

[3] On October 09, 2024, the appellant filed her appeal of the motion judge`s decision. On October 25, 2024, the respondent served this motion for security for costs. At a hearing on November 29, 2024, I appointed myself to case manage this appeal and to hear all motions pursuant to r. 37.15 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. I set out a timetable for the delivery of responding and reply materials and fixed January 27, 2025, for the hearing of the motion.

[4] On January 01, 2025, the appellant filed the transcripts necessary for her appeal. Prior to argument of this motion, the respondent filed a new motion record, returnable the same day as the motion for security for costs, seeking an order dismissing the appeal for delay and asking that the appellant be declared a vexatious litigant. I declined to hear this new motion because it had not been contemplated when the timetable was put in place and because the appellant did not have enough time to adequately respond.

The law

[5] Rule 61.06 addresses security for costs in appeals. The rule provides as follows:

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) an order for security for costs could be made against the appellant under rule 56.01; 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

1.1) If an order is made under subrule (1), rules 56.04, 56.05, 56.07 and 56.08 apply, with necessary modifications.

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.

[6] Rule 56.01 sets out factors the court may consider in determining security for costs. It provides as follows:

1. The court, on motion by the defendant or respondent in a proceeding, may make such order for security for costs as is just where it appears that,

a) the plaintiff or applicant is ordinarily resident outside Ontario;

b) the plaintiff or applicant has another proceeding for the same relief pending in Ontario or elsewhere;

c) the defendant or respondent has an order against the plaintiff or applicant for costs in the same or another proceeding that remain unpaid in whole or in part;

d) 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;

e) there is good reason to believe that the action or application is frivolous and vexatious and that the plaintiff or applicant has insufficient assets in Ontario to pay the costs of the defendant or respondent; or

f) a statute entitles the defendant or respondent to security for costs.

[7] If the moving party satisfies the court that security for costs is warranted, the onus shifts to the responding party to demonstrate an order should not be made. This may be achieved by either demonstrating they have sufficient assets in Ontario to make unnecessary an order for security for costs or by leading evidence of their impecuniosity. With respect to the latter, the responding party must also “show why justice demands” they be allowed to proceed without posting security, notwithstanding their impecuniosity: Warren Industrial Feldspar Co. Ltd. v. Union Carbide Canada Ltd., 1986 2683 (ON SC), 54 O.R. (2d) 213 [1986] O.J. No. 2364 (Ont. H.C.J.).

[8] If the responding party fails to meet its onus, the court must then determine the amount and form of such security: Rules of Civil Procedure, r. 56.04.

Positions of the parties

[9] The respondent argues security for costs should be ordered because the appeal is frivolous and vexatious, there is an outstanding costs award in this proceeding and the appellant`s behaviour suggests a deliberate strategy to prolong this litigation and increase costs. The respondent further submits the appellant has failed to meet her onus under Warren Industrial Feldspar. The respondent asks that the appellant post $20,000 as security for costs of this appeal.

[10] The appellant argues her appeal has merit because the motion judge misinterpreted the law and failed to consider material evidence in dismissing her claim. She also submits the respondent`s behaviour has increased the costs of this litigation and the costs sought are accordingly excessive and disproportionate to the issues in dispute.

Analysis

Is there good reason to believe the appeal is frivolous and vexatious?

[11] An appeal is frivolous if it is “devoid of merit or with little prospect of success.” It is vexatious if it is “taken to annoy or embarrass the respondent, or conducted in a vexatious manner, including an oblique motive for launching the appeal”: Heidari v. Naghshbandi, 2020 ONCA 757, at para. 10. The motion judge need only reach a tentative conclusion about these two questions: Heidari, at para. 9.

[12] The appellant argues the motion judge misapplied the no-fault automobile insurance provisions of the Insurance Act, R.S.O. 1990, C.I.8. The Insurance Act prevents the owner of a damaged motor vehicle from suing in tort the person that caused the damage. Instead, the owner is required to make a claim against their own insurer: Insurance Act, s. 263(5)(a).

[13] The appellant relies on paragraph 263(5)(a.1) of the Insurance Act to support her argument that she is not required to seek recovery from her own insurer. The provision reads as follows:

an insured has no right of action against a person under an agreement, other than a contract of automobile insurance, in respect of damages to the insured’s automobile or its contents or loss of use, except to the extent that the person is at fault or negligent in respect of those damages or that loss

[14] The appellant submits the motion judge’s reasons do not show that he considered what she believes to be ample evidence of the respondent’s negligence. At issue on this appeal will be the applicability of paragraph 263(5)(a.1) to the facts of this case.

[15] That provision was enacted by the legislature to cover a gap in the no-fault insurance regime. Prior to the amendment, car rental companies could in rental contracts require the renter to reimburse them in full for damages sustained to the vehicle, regardless of whether the renter was at fault for the damages. Paragraph 263(5)(a) then prevented the renter from seeking recovery from the party that caused the damage: Quality Car Rentals Inc. v. Sedaghat, 2019 ONSC 5431, at paras. 15, 16 and 18.

[16] In this case, there does not appear to be evidence of an agreement between the parties that would engage the fault or negligence provisions. In my view, at this stage the prospect of success for the appeal appears to be low.

[17] But I am not persuaded that the appellant’s conduct thus far has been vexatious. She brought her appeal within the prescribed time limits. She paid for and delivered the necessary transcripts. She has not brought any interlocutory motions. The fact the transcripts were filed a day late is of no moment, especially considering the appellant is self-represented. The appellant has other proceedings outstanding involving the respondent and has brought other proceedings both in this court and before administrative tribunals involving other parties. However, on this record I am unable to conclude this appeal has been brought in a vexatious manner.

Rule 56.01(1)(c) – unpaid costs order

[18] Pursuant to r. 63.01(1) of the Rules, enforcement of the motion judge’s decision was automatically stayed upon the filing of the notice of appeal. This necessarily extends to the order for costs: Hurst v. Hancock, 2019 ONSC 2888 at para. 23. It would accordingly be an error to consider the appellant’s non-payment of the costs award, which she is not currently obliged to pay because of the stay, as a factor in ordering security for costs.

Rule 62.06(1)(c) - other good reason

[19] The respondent argues the appellant is engaged in a deliberate strategy to prolong and drive up the costs of this proceeding. This is accomplished, according to the respondent, by filing “extraordinarily lengthy pleadings and written submissions…” The respondent further submits it will be nearly impossible to recover its costs if it is successful on appeal.

[20] As I have already explained, the appellant brought her appeal within the time required and promptly paid for and delivered the necessary transcripts. Her written material, while sometimes lengthy, is well organized, clear, and easy to understand. The appellant has not brought any interlocutory motions pending her appeal. It is the respondent that brought this motion for security for costs as well as a motion to declare the appellant a vexatious litigant and to dismiss the appeal for delay. I am not persuaded that the appellant has done anything thus far in this appeal to unnecessarily lengthen it or drive up the costs.

[21] The respondent further relies on Henderson v. Wright 2016 ONCA 89 to support its argument there is otherwise good reason to order security for costs. Strathy C.J.O. (as he then was) confirmed that security can be ordered where the appeal has a low chance of success, and it would be nearly impossible to recover costs from an appellant who can otherwise pay the costs: Henderson, at para. 27.

[22] In that case, the appellant was a bartender who was paid in cash, making proof of his income very difficult. Further, his only asset was a ¼ interest in a cottage property, which interest was worth approximately $50,000. Strathy C.J.O. concluded it would be difficult for the respondent to access that asset to satisfy a costs award. However, the appellant could access it to post security for costs.

[23] I pause to consider the amount of security sought by the respondent. While parties are free to fund their litigation as they see fit, they must be mindful that courts will generally only order costs that are fair and reasonable and what the unsuccessful party in the particular case ought to have expected to pay. This necessarily involves a measure of proportionality.

[24] In this case, the respondent moved to strike the claim in Small Claims Court because they argued it was statute barred, for reasons I have already discussed. The motion judge heard oral submissions and adjourned the case to receive and consider written submissions. After considering those submissions, the motion judge granted the motion in a brief written decision, consisting of seven paragraphs. He ordered the appellant to pay $500 in costs. That award appears to confirm how very brief the proceedings were in the Small Claims Court.

[25] These proceedings are straight-forward. The appeal turns on whether paragraph 263(5)(a.1) allows the appellant, in the circumstances of this case, to pursue a claim in tort outside the no-fault regime. In Henderson, Strathy C.J.O. concluded $15,000 in security for costs was appropriate. That is far from the case here. In my view, security for costs in the amount sought by the respondent is excessive and disproportionate to the issues engaged in this appeal. At this stage I conclude the hearing of this appeal will require no more than a day, at most, taking into consideration the need to make accommodation for certain of the appellant’s requests.

[26] In addition, unlike Henderson, I cannot on this record find it would be nearly impossible to recover costs from the appellant despite an ability to pay. The fact the appellant does not appear to own real property in Ontario does not lead to the conclusion it would be nearly impossible to collect costs from her. Ordering security for costs in these circumstances would require them to be ordered every time an appeal had a low chance of success, and the appellant did not own real property. In my view, that is not the test.

[27] Accordingly, I am not persuaded I should exercise my discretion to order security for costs for other good reason pursuant to r. 62.06(1)(c).

Conclusion

[28] For these reasons, the respondent’s motion for security for costs is dismissed.

[29] The appellant asked for certain declaratory relief, including what she perceives to be inappropriate conduct on the part of counsel for the respondent as well as medical accommodations. I have already considered the materials filed by the appellant regarding her accommodation request and confirm I have already implemented her requests. As the case management judge on this matter, I will continue to ensure the appellant’s accommodation requests are appropriately addressed.

[30] As I indicated at the hearing of this motion, the next step in this proceeding will be a case conference with myself. At that time, we can finalize the timetable for argument of the appeal. I will also hear from the parties with respect to costs of this motion, and any other matters they may wish to raise.

[31] I accordingly ask the trial coordinator to contact the parties to schedule a 1.5-hour attendance before myself via videoconference.

Regional Senior Justice P.J. Boucher

Date: March 03, 2025