2017 ONSC 5390
COURT FILE NO.: 11663/17
DATE: 2017/09/11
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
620369 Ontario Inc. c.o.b. as Herman’s Building Centres
Rachel Goerz, for the Plaintiff/Respondent
Plaintiff/Respondent
- and -
Chris Dunham
Margaret A. Hoy, for the Defendant/Appellant
Defendant/Appellant
HEARD at Welland, Ontario: September 6, 2017
The Honourable Justice T. Maddalena
ENDORSEMENT ON MOTION FOR SECURITY FOR COSTS
[1] The plaintiff (moving party on the motion and respondent in the appeal) brings the motion for security for costs against the defendant (responding party in this motion and appellant in the appeal).
[2] The test for the court on a motion for security for costs is outlined in rule 61.06(1) of the Rules of Civil Procedure.
[3] Rule 61.06(1) states as follows:
SECURITY FOR COSTS OF APPEAL
61.06 (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.
[4] Thus, the two-part test for this court to consider is whether 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.
[5] On a motion pursuant to this rule, the burden is on the plaintiff/moving party to show that the two-part test has been met.
The Position of the Plaintiff
[6] The moving party plaintiff states that there is good reason to believe the appeal is frivolous and vexatious given that the 24-page decision of the Deputy Judge, which decision is dated May 11, 2017, extensively addressed all the legal issues raised in the pleadings, at the trial, and in the factums.
[7] Further, the affidavit of Lori Robillard, sworn July 12, 2017, deposes that the defendant is the owner of a residence situated at 7653 Wayne Street, Niagara Falls, Ontario. Further to that affidavit, Ms. Robillard deposes that the Registry Office records indicate the home was purchased August 29, 2003 for the purchase price of $140,000.00. That same day, a charge was registered in favour of CIBC Mortgages Inc. in the amount of $128,520.00.
[8] The moving party claims there is not much equity in the home based on the information available in the public records of the Land Registry Titles abstract.
[9] At the trial of the matter, the evidence of the defendant was that he was not working and was in receipt of disability benefits.
[10] The plaintiff therefore submits that the defendant has insufficient assets in Ontario to pay the costs of an appeal and he should not be permitted to continue without protecting the plaintiff with regard to costs of the appeal.
The Position of the Defendant
[11] The defendant states that the threshold test required for security for costs has not been met. The defendant states that the appeal raises issues with potential to impact the legislative landscape. The appeal has the potential to set new precedent and cannot be described as frivolous and vexatious.
[12] Further, the defendant states that he is not impecunious but submits that he is a person of modest means.
[13] The defendant states he need not prove a strong meritorious case at this motion. The appeal is bona fide and must not be impeded by the plaintiff’s motion for security for costs.
Analysis
[14] On a motion dealing with security for costs pursuant to an appeal, it is clear that the court is not to engage in a full inquiry into the merits of the appeal or to reach a conclusion as to the full merits of the appeal.[^1]
[15] Rule 61.06(1)(a) requires only a finding that there is good reason to believe that the appeal is frivolous and vexatious, and not an actual finding that it is frivolous and vexatious. (See Schmidt v. Toronto-Dominion Bank)
[16] The court must, however, be able to assess the prospect of success of the appeal.
[17] Black’s Law Dictionary defines frivolous as devoid of merit on the face of the record with little prospect of success.
[18] Vexatious is described in Black’s Law Dictionary as a party bringing a proceeding to annoy or harass the opposite party.
[19] The 24-page decision of the Deputy Judge is comprehensive. The issues considered were clearly outlined in paragraph 10 of the reasons of the Deputy Judge. The detailed reasons appear sound.
[20] This court is not assessing the correctness of the decision of the Deputy Judge. The full merits of the appeal are to be considered only at the hearing of the appeal; however, the court must consider the prospect of success of the appeal and whether the appellant has assets in Ontario to pay the costs of the appeal.
[21] The Deputy Judge, in his reasons, made references to the defendant having “no meritorious defence”[^2] and “no reasonable explanation for the default”.[^3]
[22] In paragraph 36 the Deputy Judge noted in his reasons that the defendant could have brought a motion to set aside the original default judgment, but “he failed to do so”.
[23] Further, in paragraph 54 of his decision, the Deputy Judge noted “a delay of over one year is not a period which is as soon as reasonably possible”. In all cases, he provided full details as to why and how he reached his ultimate conclusions.
[24] In the case of Szpakowski v. Kramer, 2012 ONCA 77, the court noted:
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. As this Court noted in Schmidt v. Toronto-Dominion Bank (1995), 1995 3502 (ON CA), 24 O.R. (3d) 1, at p. 5:
The words “good reason to believe” qualify the words “frivolous and vexatious” and indicate a finding short of an actual determination that the appeal is frivolous and vexatious. 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 devoid of merit.
[25] In my view the above applies to the case at bar.
The Sufficiency of Assets
[26] The Deputy Judge stated, in his reasons, that the defendant receives a disability pension and further stopped work in 2000.[^4]
[27] In the plaintiff’s search of the Land Registry Office, there is information that the defendant owns a home. There is no information regarding what, if any, equity is currently in the home.
[28] The defendant is in receipt of a pension, but there is no information regarding the availability of exigible assets to pay the costs of an appeal. There is nothing in the affidavit of the defendant that he even has assets in Ontario, and there is no reference to his ownership of a home in his affidavit sworn 31st of August 2017.
[29] The court’s conclusion is that there is good reason to doubt that the defendant has sufficient assets in Ontario to pay for the costs of an appeal.
[30] Courts have stated previously that impecunious litigants are not entitled to proceed with impunity and to cause their opponents to incur significant costs without having to face the normal consequences of costs if they are unsuccessful.[^5]
[31] In the instant case, there is no evidence before the court regarding the sufficiency of assets in Ontario of the defendant to pay the costs of an appeal.
[32] The plaintiff suggests security for costs in the range of $10,000 to $17,000. The defendant opposes any payment, but suggests a three-person panel of the Divisional Court should be $4,000 to $6,000 only.
[33] The appeal will incur significant legal fees. Given the minimal prospect of success, I will exercise my discretion to order security for costs, which I fix at $8,000 as a reasonable estimate of the costs of the party seeking security. This amount shall be paid into court to the credit of this action within 60 days.
Costs
[34] The parties may make written submission with respect to costs of this motion. Submissions are limited to two pages, plus a bill of costs. The plaintiff/respondent’s submissions are due by September 25, 2017. The defendant/appellant’s are due October 10, 2017. No reply is permitted.
Maddalena J.
Released: September 11, 2017
2017 ONSC 5390
COURT FILE NO.: 11663/17
DATE: 2017/09/11
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
620369 Ontario Inc. c.o.b. as Herman’s Building Centres
Plaintiff/Respondent
- and –
Chris Dunham
Defendant/Appellant
ENDORSEMENT ON MOTION FOR SECURITY FOR COSTS
Maddalena J.
Released: September 11, 2017
[^1]: Schmidt v. Toronto-Dominion Bank (1995), 1995 3502 (ON CA), 24 O.R. (3d) 1 [^2]: Para. 52 of the decision. [^3]: Para. 53 of the decision. [^4]: Paras. 27 & 28 of the reasons of the Deputy Judge. [^5]: Szpakowski v. Kramer, 2012 ONCA 77