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Appeals - Security for Costs (2). 9383859 Canada Ltd. v. Saeed
In 9383859 Canada Ltd. v. Saeed (Ont CA, 2023) the Court of Appeal considered two motions to dismiss (the same appeal) for failure to comply with security for costs orders [R61.06(2)]:[8] In Virc v. Blair (2016), 134 O.R. (3d) 795 (C.A.), at paras. 3-5, this court cited Dataville Farms Ltd. v. Colchester (Municipality), 2014 NSCA 95, 351 N.S.R. (2d) 65, and listed several factors to consider on a motion to dismiss based on a failure to comply with an order to post security for costs, including:. The decision is discretionary: It should not be presumed that an order for dismissal will automatically flow from an appellant's failure to abide by an order to give security.
. Careful attention and deference must be accorded to the initial decision to award security for costs.
. Once a failure to comply with an order to pay security for costs is established, the ‘onus then shifts to the appellant to provide compelling reasons why dismissal is not in the interests of justice.
. An appellant who simply re-argues that security is unwarranted will likely be unsuccessful.
. Impecuniosity and the reasons for it may be considered.
. The merits of the appeal are a factor to be considered in such an analysis.
. The discretion under rule 61.06(2) should be exercised in light of the particular subsection of rule 61.06(7) under which the initial order was made. [9] The appellant has offered no valid excuse for this noncompliance with the security for costs orders. It submits that the appeal should not be dismissed because it has sought leave to appeal the Panel Decision to the Supreme Court of Canada. This is similar to the argument raised by the appellant on an earlier dismissal motion regarding its suit against another group of defendants in this litigation: 9383859 Canada Ltd. v. Navaratnam, 2021 ONCA 210. In dismissing that appeal for failure to comply with a security for costs order, Paciocco J.A., stated:[18] I have also considered whether these motions for dismissal are premature, given that the panel review of the Extension Denial Decision remains outstanding. In my view, the interests of justice are not served by waiting for that review to play out.
[19] In Susin v. Susin, 2008 ONCA 66, 37 E.T.R. (3d) 159, Laskin J.A. similarly dismissed an appeal for failure to post security for costs while an effort to obtain a panel review was outstanding because the appellant had “not put forward any basis to resist” the dismissal motion: at para. 5.
[20] 938’s position in this case is even more dire than that of the appellant in Susin. 938 has provided no meaningful basis to resist the Security for Costs Order, no meaningful basis to resist the Extension Denial Decision and seek a panel review of the Security for Costs Order, and no meaningful basis to doubt the Motion to Strike Order, which is the subject of the Main Appeal. [10] I agree with the approach taken by my colleagues Paciocco J.A. and Laskin J.A. In considering whether a dismissal is premature, the court should have regard to outstanding motions or applications. However, the mere existence of such proceedings is not sufficient to deny a dismissal order, which should otherwise be made. The motion judge should take a hard look at any outstanding motions or applications to determine whether they have any chance of success. Here, there are no plausible grounds to argue that the panel erred in dismissing the appeal of the orders of Miller J.A. The mere filing of the application of leave to appeal in these circumstances does not persuade me that I should decline to exercise my discretion to dismiss the appeal. . Faraone v 285 Spadina SPV Inc.
In Faraone v 285 Spadina SPV Inc. (Div Court, 2023) the Divisional Court considered a security for costs motion in an appeal, which was from an unusual RTA s.207(2) application (which was allowed) to terminate and evict [SS: when the dollar value exceeds $35k RTA s.207(2) allows such applications to be brought in the Superior Court, not the LTB]:[13] The Applicants ground their legal basis for security for costs in two rules from the Rules of Civil Procedure R.R.O. 1990, Reg. 194. Rule 61.06 (1) provides: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. R.R.O. 1990, Reg. 194, r. 61.06 (1); O. Reg. 465/93, s. 6.
(1.1) If an order is made under subrule (1), rules 56.04, 56.05, 56.07 and 56.08 apply, with necessary modifications. O. Reg. 288/99, s. 21 [14] The second mechanism by which security for costs can be ordered pending an appeal comes from r. 56.01, referred to above in r. 61.06 (1)(b). The Applicants submit that Rule 56.01(1)(c) applies here because the Respondent owes the sum of $13,721.21 in the underlying Application, which remains unpaid in full. Rule 56.01(1)(c) provides:56.01 (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,
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(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; [15] In Yaiguaje v. Chevron Corp. 2017 ONCA 827; 138 O.R. (3d) 1, the Court of Appeal for Ontario confirmed that an order for security for costs is a discretionary measure. Courts should carefully consider whether such an order is “just” (at para. 19). Security for costs can be a tactic in litigation which can prevent a case from being heard on its merits. The Court of Appeal offered guidance in Yaiguaje on the relevant factors on such motions. These factors include the merits of the claim, the impact of actionable conduct by the applicant, delay in bringing the motion, the impact of actionable conduct by the applicants on the available assets of the respondent, access to justice concerns and the public importance of the litigation.
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[18] The evidence on this motion is that the Respondent does not appear to have assets in his own name in Ontario. In his oral submissions, the Respondent advised the court that he does have assets, (for example, two luxury vehicles) and his net worth is in the “seven figure” order of magnitude. I infer from this that he has assets that may not be available for fulfilling a judgment unless he decides to draw on those assets. Thus, an order for security for costs would not have a disproportionate or adverse impact on his personal assets.
[19] This litigation is not of public importance, but the principles underlying it are of public importance because of access to justice concerns. The courts are charged with ensuring the orderly and timely settlement of disputes in a civil society. Attempts to frustrate, delay, or interfere with the adjudication of disputes must be seen and addressed. To do otherwise reduces public confidence in the administration of justice and causes deserving litigants unnecessary suffering. There is some evidence in the record before me that supports an inference that the significant financial prejudice suffered by the Applicants as a result of the rent arrears issues here has had consequences for their relationship.
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[21] I find that the Applicants have met the tests for security for costs both in r. 61.06(1)(a) and in r. 56. 01(1)(c) and that making such an order is just. I find that the record of proceedings below, the findings of Justice Dineen and the ongoing apparent overholding without paying rent amount to “exceptional circumstances” which justify security for judgment. I find that “there is good reason to believe that the appeal is frivolous and vexatious” and that the Respondent “has insufficient assets in Ontario to pay the costs of the appeal”. Further, there is an outstanding, unpaid order for payment to the Applicants. . Sidiqi v. Ahmadzai
In Sidiqi v. Ahmadzai (Ont CA, 2023) the Court of Appeal considered (and awarded) substantial security for appellate costs:[4] Rule 56.01(c) provides that security for costs may be granted where the moving party has an order for costs that remains unpaid.
[5] Rule 61.06 provides that an appellate court may make an order for [SS: 'security for'] costs of the proceedings and of the appeal where an order for costs could be made against an appellant under Rule 56.01 or where “for other good reason, security for costs should be ordered.” . G.S. v. S.B.
In G.S. v. S.B. (Div Court, 2023) the Divisional Court considers an appellate security for costs motion [R61.06(1)]:The Motion for Security for Costs
[46] The mother seeks security for costs of the trial and the appeal in the amounts of $100,000 and $30,000, respectively, under r. 61.06(1)(b) of the Rules of Civil Procedure.[13] Rule 61.06(1) provides: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. [47] Rule 61.06(1) requires a two-stage analysis: first, the respondent must show that they meet the terms of the rule; second, the motion judge must “take a step back” and consider the justness of the order sought in all the circumstances, with the interests of justice at the forefront: Yaiguaje v. Chevron Corp., at para. 24;[14] Heidari v. Naghshbandi, at para. 6(2).[15]
[48] In considering the justness of the order sought, relevant factors include the merits of the appeal, any delay in moving for security for costs, the impact of actionable conduct by the respondent on the available assets of the appellant, access to justice concerns, the public importance of the litigation and the amount and form of security sought by the respondent: Yaiguaje, at para. 24; Heidari, at para. 6(3). An order for security for costs is intended to provide “a measure of protection” to the respondent for the costs to be incurred on the appeal, without denying the appellant a chance to pursue an appeal: Heidari, at para. 6(4).
[49] When an appeal involves the wellbeing of a child, their best interests must be considered in every step of the proceeding; Lenihan v. Shankar, at para. 35;[16] Morwald-Benvenides v. Benvenides, at para. 13.[17] . Grimm v. Ontario (Children's Lawyer)
In Grimm v. Ontario (Children's Lawyer) (Ont CA, 2023) the Court of Appeal considers the criteria for security of costs on an appeal:(a) General principles
[11] Rule 61.06 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, governs security for costs on appeals. It provides that in an appeal, the court may order security for costs in accordance with the following criteria: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. [12] The overarching consideration on this motion is whether “the justness of the case demands it”: Yaiguaje v. Chevron Corporation, 2017 ONCA 827, 418 D.L.R. (4th) 679, at para. 23. In addition to the criteria listed above, in determining whether an order for security for costs should be made, the court must step back and consider “the justness of the order holistically, examining all the circumstances of the case and guided by the overriding interests of justice to determine whether it is just that the order be made”: Yaiguaje, at para. 25. Even if I conclude that Ms. Grimm has satisfied all of the criteria under the rules, I may still exercise my discretion not to award security for costs if it is in the interests of justice.
[13] With those general principles in mind, I turn to consider the particular circumstances of this case.
(i) Is there good reason to believe Mr. Smith’s appeal is frivolous and vexatious?
[14] With respect to this criterion, this court observed in Schmidt v. Toronto‑Dominion Bank (1995), 1995 CanLII 3502 (ON CA), 24 O.R. (3d) 1 (C.A.), 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. . Midland Resources Holdings Limited v. Shtaif
In Midland Resources Holdings Limited v. Shtaif (Div Court, 2023) the Divisional Court considers an appeal motion, here for security for costs under R61.06(1)(b) ["an order for security for costs could be made against the appellant under rule 56.01"]:Rule 61.06(1)(b) – an order could be made against the appellant under rule 56.01
[35] In light of my conclusions under Rule 61.06(1)(a) and (c), it is not necessary for me to address whether an order could be made under Rule 56.01 via Rule 61.01(b). However, the facts also support an order under Rule 56.01. Shtaif is not ordinarily resident in Ontario, he has unpaid orders for costs against him in this and other proceedings, and there is good reason to believe that his appeal is frivolous and vexatious and that he has insufficient assets in Ontario to pay costs, if awarded. Shtaif has failed to adduce any evidence in response to suggest that an order for security for costs would be unjust, such as by demonstrating that he has assets in Ontario, or that he is impecunious or even experiencing any financial hardship: Zeitoun v. Economical Insurance Group, 2008 CanLII 20996 (Div. Ct.), at paras. 45-50. . Midland Resources Holdings Limited v. Shtaif
In Midland Resources Holdings Limited v. Shtaif (Div Court, 2023) the Divisional Court considers an appeal motion, here for security for costs under R61.06(1)(c) ["other good reason"]:Rule 61.06(1)(c) – “other good reason”
[32] Justice Hourigan, in making an order for security for costs against Shtaif in October 2021, relied on Rule 61.06(1)(c). In his reasons, Hourigan J.A. stated that “[o]n a motion for security for costs, the overarching principle to be applied to all the circumstances is the justness of the order sought.” Justice Hourigan quoted from Yaiguaje v. Chevron Corporation, 2017 ONCA 827, 138 O.R. (3d) 1, at para. 22:In deciding motions for security for costs, judges are obliged to first consider the specific provisions of the Rules governing those motions and then effectively to take a step back and consider the justness of the order sought in all the circumstances of the case, with the interests of justice at the forefront. . Midland Resources Holdings Limited v. Shtaif
In Midland Resources Holdings Limited v. Shtaif (Div Court, 2023) the Divisional Court considers some useful practice (and quantum) points in an appeal motion, here for security for costs under R61.06:[1] Midland Resources Holdings Limited, a British Virgin Islands company (“Midland BVI” or “Midland”), the respondent in an appeal pending before this Court, moves for security for costs pursuant to Rule 61.06 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. Midland submits, among other things, that the appeal is frivolous and vexatious and there is reason to believe that the appellant, Michael Shtaif (“Shtaif”), has insufficient assets to pay the costs of the appeal. Midland also submits that security for costs should be ordered “for other good reason”, relying on Shtaif’s history of abusing the court’s process. Midland also relies on factors in Rule 56.01, including that Shtaif is not ordinarily resident in Ontario, has no assets in Ontario, and that Shtaif is already subject to a judgment and costs orders in favour of Midland, which have not been paid.
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Midland has standing to seek security for costs
[18] Shtaif’s first objection, that Midland cannot seek security for costs because it is a plaintiff, not a defendant, has no merit. Shtaif relies on Rule 56.01, which provides that “[t]he court, on motion by the defendant or respondent in a proceeding, may make such order for security for costs as is just…” This means, Shtaif argues, that only a defendant or respondent can bring a motion for security for costs.
[19] Shtaif ignores two important points. First, this motion is brought under Rule 61.06, which deals specifically with security for costs on appeals and permits a respondent on an appeal to move for such an order, as Midland has done here.
[20] Second, even if Rule 56.01 applied, the term “respondent” is defined in Rule 1.03 to mean “a person against whom an application is made or an appeal is brought.” [emphasis added] Shtaif has brought this appeal against Midland which is a respondent on the appeal.
Midland’s motion is not too late
[21] Midland served its motion for security for costs on November 14, 2022, after Shtaif perfected his appeal on September 23, 2022. Shtaif complains that Midland should have moved sooner, before putting Shtaif to the effort of filing a record and preparing a factum.
[22] Shtaif is correct that delay is a factor in considering the justness of an order for security for costs, as was observed by Jamal J.A. (as he then was) in Heidari v. Naghshbandi, 2020 ONCA 757, 153 O.R. (3d) 756, at para. 6. But it is just one factor. Prejudice from the delay must also be considered: Trillium Motor World Ltd. v. General Motors of Canada Limited, 2016 ONCA 702, at para. 35.
[23] In this case, Shtaif has not adduced any evidence of prejudice arising from the delay other than that he has had to prepare the materials himself. He has not incurred any legal fees and, as counsel for Midland points out, his disbursements are minimal as the materials have been filed electronically, without the need for large photocopying expenses. Further, the delay should be reviewed in light of the outstanding unpaid costs orders, the history of the proceedings, and the findings by Associate Justice Robinson that Shtaif’s motion was a collateral attack on other recent judgments of the Superior Court and of the Court of Appeal. Given this history, I find Midland acted reasonably in not incurring costs of bringing this motion until it had confirmation that Shtaif would actually proceed with the appeal.
[24] As Jamal J.A. pointed out in Heidari, motions for security for costs are meant to provide “a measure of protection” to the respondent for the costs that will be incurred on the appeal. Although Midland has now served its factum, exhibit book, and compendium for the appeal, it will continue to incur costs in preparing for argument. Any delay by Midland in bringing this motion is outweighed by the justness of granting “a measure of protection” to Midland for the costs it must incur in responding to Shtaif’s appeal to this Court.
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Quantum
[36] Midland seeks an order requiring Shtaif to post security for costs in the amount of $43,584.21. This amount includes an estimate of $18,306 in costs at a partial indemnity rate for the appeal, and the costs ordered by Associate Justice Robinson for the Enforceability Decision of $25,278.21, which were fixed on a substantial indemnity basis and ordered payable forthwith: Costs Endorsement, at para. 39.
[37] Pursuant to Rule 61.06(1), I have the power to include the amount ordered by Associate Justice Robinson on the motion below if I find it is just to do so. In Trillium Motor, at para. 17, the Court of Appeal confirmed that this meant an appellate judge has the discretion to award “security for costs for the trial as well as the pending appeal.”
[38] In my view, it is just in the circumstances of this case to include the costs ordered on the motion below in the order for security for costs. In his Costs Endorsement, Associate Justice Robinson agreed that the motion was an abuse of process. He also found that the conduct of the motion, including unsubstantiated allegations of deception against Midland, warranted costs on a substantial indemnity basis. These findings, together with my conclusion that an order for security for costs is justified on virtually all of the possible grounds set out in the Rules, support my conclusion.
[39] I also find that the request for security for costs of the appeal of $18,306, estimated on a partial indemnity basis, is reasonable. . Midland Resources Holdings Limited v. Shtaif
In Midland Resources Holdings Limited v. Shtaif (Div Court, 2023) the Divisional Court considers an appeal motion, here for security for costs under R61.06(1)(a) ["frivolous and vexatious"]:Rule 61.06(1)(a) – frivolous and vexatious and insufficient assets
[25] Midland has satisfied me that “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” as set out in Rule 61.06(1)(a).
[26] A proceeding is vexatious where it is an attempt to relitigate a matter that has already been determined, or has no chance of success, or is brought for an improper purpose, including harassing, oppressing or frustrating other parties, and preventing a party from collecting on a judgment. Relevant factors in determining if a proceeding is vexatious include whether the litigant has failed to pay costs of prior proceedings or has persistently pursued unsuccessful appeals: see e.g., Re Lang Michener and Fabian (1987), 1987 CanLII 172 (ON SC), 59 O.R. (2d) 353 (H.C.J.); Dobson v. Green, 2012 ONSC 4432; Howie, Sacks & Henry LLP et al. v. Wei Chen, 2015 ONSC 2501.
[27] Shtaif’s argument on the Enforceability Decision before Associate Justice Robinson was found to be a collateral attack on the decisions of Justice Morgan and the Court of Appeal. This appeal appears to be yet another attempt to avoid paying the Sanderson Judgment and to use and abuse the justice system to cause Midland to incur legal costs. Shtaif's appeal also appears to challenge findings of fact made by Associate Justice Robinson in his detailed, “facially sound reasons.” The Court of Appeal has held that “such appeals appear to have no merit”: Henderson v. Wright, 2016 ONCA 89; Schmidt v. Toronto Dominion Bank (1995), 1995 CanLII 3502 (ON CA), 24 O.R. (3d) 1. In these circumstances, I have no difficulty concluding that there is good reason to believe that this appeal is frivolous and vexatious.
[28] In reaching this conclusion I have also considered Shtaif’s submission that the Alberta courts might be going in a different direction regarding the validity of the assignment by the Royal Court of Guernsey. However, as Associate Justice Robinson noted, at paras. 29-31 of his decision, the Ontario Court of Appeal has spoken on this issue in upholding Morgan J.’s determination of the issue in favour of Midland. Further, as the Ontario Court of Appeal stated, nothing in its decision “binds or precludes the Alberta courts from proceeding as they see fit”, and the same is true of the effect of Alberta decisions on this court: Bokserman 2022, at para. 41.
[29] There is also good reason to believe that Shtaif has insufficient assets in Ontario to pay Midland’s costs of the appeal before this court. Shtaif does not reside in Ontario, has paid nothing to anyone as ordered in various proceedings over the past decade. Had he any assets in Ontario, they likely would have come to light by now.
[30] Accordingly, I find that Midland has met its burden under Rule 61.06(1)(a). However, meeting the criteria does not create a right to security; rather, it “triggers an inquiry into the justness of the order sought”: York University v. Markicevic, 2017 ONCA 651, at para. 19. This includes taking into account a number of factors, including “the merits of the claim, the financial circumstances of the plaintiff and the possibility that an order for security may prevent a bona fide claim from proceeding”, recognizing that a judge has a “broad discretion” in “making such order as is just”: at para. 20. Put another way, the “determination requires balancing the responding party’s right to access to justice against the moving party’s right to protection from having to defend unmeritorious positions in circumstances in which it is unlikely to recover its costs”: at para. 22.
[31] In my view, the balancing here all favours Midland. Associate Justice Robinson found Shtaif’s motion to be without merit and an abuse of process. There is no evidence that Shtaif is impecunious or unable to proceed in the face of an order for security for costs. The history of the litigation between Midland and Shtaif supports the conclusion that, in the absence of an order for security, Midland is unlikely to recover its costs.
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