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Civil Litigation - Orders - Security for Trial

. Wiseau Studio, LLC v. Harper

In Wiseau Studio, LLC v. Harper (Ont CA, 2021) the Court of Appeal considers, for apparently the first time in Ontario law, an unusual 'security for trial' motion, where the moving party (respondents to an appeal) sought security for what they expected to receive at trial, and costs for both the trial and appeal (the order sought was akin to a Mareva order, which freezes assets):

[22] Section 134(2) of the Courts of Justice Act, R.S.O. 1990, c. C.43 (“CJA”) provides that, “On motion, a court to which a motion for leave to appeal is made or to which an appeal is taken may make any interim order that is considered just to prevent prejudice to a party pending the appeal.”

[23] Rule 1.05 of the Rules of Civil Procedure R.R.O. 1990, Reg. 194, provides that, “When making an order under these rules the court may impose such terms and give such directions as are just.”

[24] Security for judgment is an extraordinary remedy that should only be granted in exceptional circumstances: Vaillancourt v. Cater, 2017 ABCA 282, at para. 20; Aetna Financial Services Ltd. v. Feigelman, 1985 CanLII 55 (SCC), [1985] 1 S.C.R. 2 at p. 10; C.H. v. M.H., 1997 ABCA 263, 53 Alta. L.R. (3d) 80 (sub nom Hamza v. Hamza), at para. 24.

[25] Such an order requires an appellant to post security for judgment before continuing with the appeal. In this way, security for judgment functions much like a Mareva injunction and restrains the appellant from disposing of or dissipating assets in order that they be available to satisfy the judgment should it be upheld and if security for judgment is ordered and not posted, the appeal is dismissed: Vaillancourt, at. para. 20; Vaccaro v. Twin Cities Power-Canada U.L.C., 2013 ABCA 252, 97 Alta. L.R. (5th) 193, at para. 14.

[26] Security for judgment has been granted in other jurisdictions in the following circumstances:

1. Where there are no assets in the jurisdiction against which to enforce a judgment and the appeal has little merit (Vaccaro at para. 11; Creative Salmon Company Ltd. v. Staniford, 2007 BCCA 285, at paras. 12 and 14; Richland Construction Inc. v. Manningwa Developments Inc., 1996 CanLII 3188 (B.C. C.A.) at paras. 12-13);

2. To preserve assets that would otherwise be destroyed, disposed of, or dissipated prior to the resolution of the dispute: Aetna Financial at p. 12); and

3. To encourage respect for the judicial process and avoid abuse of process (C.H., at para. 23, citing Mooney v. Orr (1994), 1994 CanLII 1779 (BC SC), 100 BCLR (2d) 335 at p. 348 (B.C. S.C.); Vaccaro at paras. 12-14; and in respect of Mareva injunctions, Aetna Financial at pp. 13-14).

[27] In First Majestic Silver Corp. et al. v. Davila, 2013 BCCA 312, the court invoked s. 10(2)(b) of the British Columbia Court of Appeal Act, R.S.B.C. 1996, c. 77, a provision with similar wording to that in s. 134 of the CJA which provides that “In an appeal or other matter before the court, a justice may … (b) make an interim order to prevent prejudice to any person”. The court ordered that appellants who resided out of the jurisdiction without assets in the jurisdiction post security for the trial judgment, failing which the respondents were granted leave to apply to have the appeal dismissed as abandoned. In so doing, the court set out the principles governing the exercise of discretion in ordering security for a trial judgment:

1. The onus is on the applicant to show that it is in the interest of justice to order posting for security of a trial judgment and/or of trial costs.

2. The applicant must show prejudice if the order is not made.

3. In determining the interests of justice the chambers judge should consider the merits of the appeal and the effect of such an order on the ability of the appellant to continue the appeal. (See also Vaillancourt, at para. 24).

[28] The interests of justice may include a consideration of the ex juris residence of an appellant and therefore the effective immunity of an appellant from enforcement of the judgment: First Majestic Silver Corp. et al., at para. 16; Paz v. Hardouin, 1995 CanLII 1808 (B.C. C.A.), at paras. 22. They may also include a consideration of the ability to enforce the judgment in the appellant’s ex juris jurisdiction and/or the absence of assets in the jurisdiction in which the judgment was rendered: First Majestic Silver Corp. et al., at para. 16; Cadinha v. Chemar Corp. Inc., 1995 CanLII 1017 (B.C. C.A.), at paras. 5-7.

[29] The interests of justice may not be relied upon by a successful plaintiff where the effect of requiring the posting of security for a trial judgment would be to preclude a party from pursuing the appeal: Kedia v. Shandro Dixon Edgson, 2007 BCCA 316, 243 B.C.A.C. 80, at para. 39, relying on Chan v. Vancouver Trade Mart Ltd., 1997 CanLII 4108 (B.C. C.A.), at para. 10.

[30] However, in Creative Salmon, Lowry J.A. held at para. 12 that:

[A]dverse financial circumstances will generally not defeat an application for security where an appeal is virtually without any merit. A successful plaintiff should not be required to respond to an unmeritorious appeal when there is no real prospect of recovery.

[31] A finding that an appeal has no reasonable prospect of success may be a factor: see Richland Construction Inc., at para. 8.

[32] For the reasons set out below, I find that this is one of those rare and exceptional circumstances where an order for security for judgment is warranted.