



COURT OF APPEAL FOR ONTARIO

CITATION: Henderson v. Wright, 2016 ONCA 89

DATE: 20160201

DOCKET: M45958 (C60624)

Strathy C.J.O. (In Chambers)

BETWEEN

John Roy Henderson

Plaintiff (Appellant/

Responding Party)

and

Muriel Evelyn Wright

Defendant (Respondent/

Moving Party)

Robert Hammond, for the respondent/moving party

Clinton Culic, for the appellant/responding party

Heard: January 22, 2016

On motion for security of costs under r. 61.06 of the
Rules
    of Civil Procedure,
R.R.O. 1990, Reg. 194
.

ENDORSEMENT

[1]

The moving party, respondent on appeal, seeks an order for security for
    costs of the appeal under r. 61.06 of the
Rules of Civil Procedure
,
    R.R.O. 1990, Reg. 194.  She submits that there is good reason to believe the
    appeal is frivolous and vexatious and that the appellant has insufficient
    assets in Ontario to pay the costs of the appeal. She also submits that there
    are other good reasons to order security for costs.

[2]

For the reasons that follow, I agree and order the appellant to post
    security for costs.

Background

[3]

The appellant is the respondents former son-in-law. He claimed that he
    had an interest in a home that the respondent purchased in her name and in which
    he and his wife (the respondents daughter) lived, paying rent, for over 20
    years.

[4]

He claimed there was an agreement under which the respondent made the
    down payment  $55,000, of which the appellant contributed $5,000  and he and
    his wife would then pay rent, which was to cover the mortgage, taxes and
    insurance. When the mortgage was paid off, he said, the house was to be
    transferred to him and his wife.

[5]

The respondents version of events differed. She said her intention was
    to make a real estate investment that provided her daughter and son-in-law with
    a nice place to live at a favourable rent. The appellants contribution merely
    lowered the rent payable. She said she never intended to gift the amount of the
    down payment she paid, or promised to transfer ownership of the property to the
    appellant and her daughter once the mortgage was paid.

[6]

The respondent also made several large annual lump sum mortgage
    payments, in addition to the regular monthly payments, to pay down the
    mortgage. These totalled $38,000. The mortgage was paid off seven years after
    the purchase of the property. The appellant claimed that he was not aware of
    this.

[7]

Following the appellants separation from the respondents daughter, the
    appellant remained in the house, but did not pay rent. The respondent applied
    to the Landlord and Tenant Board to evict him, at which time the appellant
    claimed he had an ownership interest in the property based on the alleged agreement
    described above.

[8]

The matter went to the Superior Court to determine whether the appellant
    had an ownership interest. Alternatively, the appellant relied on the equitable
    principle of promissory estoppel.

[9]

The trial judge noted that the determination of the issues would require
    him to make findings of fact based on conflicting testimony. He instructed
    himself on the burden of proof.

[10]

The
    trial judge accepted the respondents version of the events and rejected the
    appellants, which he found was not credible. He concluded that the respondent
    had not promised to transfer the property to the couple when the mortgage was
    paid off.  He gave detailed reasons for his conclusion. He also rejected the
    claim based on promissory estoppel, finding that none of the requisite elements
    had been made out.

[11]

The
    appellant appealed.

Discussion

[12]

Rule
    61.06 governs security for costs on 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

I 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.

[13]

The
    respondent argues an order to post security for costs is justified under r.
    61.06(1)(a) or r.61.06(1)(c).

(1)

Rule 61.06(1)(a)  Frivolous and vexatious claim with insufficient
    assets

[14]

Under
    this rule, the appellate judge must (a) have good reason to believe the appeal
    is frivolous and vexatious, and (b) have good reason to believe the appellant
    has insufficient assets in Ontario to cover the costs of the appeal.

(i)

Good reason to believe the appeal is frivolous and vexatious

[15]

There
    is good reason to believe the appeal is frivolous and vexatious.

[16]

This
    appeal does not raise any arguable error in law, and challenges findings of
    fact and credibility for which the trial judge set out detailed, facially sound
    reasons. This court has held that such appeals appear to have no merit:
Schmidt
    v. Toronto Dominion Bank
(1995), 24 O.R. (3d) 1.

[17]

The
    appellants alleged error in law  his submission that the trial judges
    observations in paras. 40 and 41 of his reasons violates the rule in
Browne
    v. Dunn 
is, in my view, misconceived. That rule applies to counsel or a
    party who seeks to discredit a witness without having given the witness a fair
    opportunity to respond to the allegation. I do not believe it prevents a trial
    judge from asking himself a rhetorical question and then finding a witnesss
    evidence to be illogical or incredible based on the judges assessment of his
    or her behaviour in the circumstances. Counsel for the moving party could
    identify no authority for this proposition and I am aware of none.

[18]

I
    also do not agree with counsels characterization of the judges findings as
    circular reasoning, or premised on his acceptance of the respondents evidence.
    The judge simply found that the appellants evidence did not make sense.

[19]

The
    other grounds of appeal essentially challenge the trial judges findings of
    fact or inferences he drew from the facts. At trial, the parties gave
    conflicting versions of events, and the case was decided on the basis of the
    trial judges assessment of the credibility and reliability of the witnesses
    evidence. As I said, the trial judge gave detailed and apparently sound reasons
    for his findings. In such cases, there is almost no possibility of successfully
    overturning the result.

[20]

Combined
    with the appellants less than diligent pursuit of his litigation  waiting
    until he was served with an eviction application to start his claim, appealing
    the post-trial Landlord and Tenant Board eviction order on the last day,
    abandoning that appeal, refusing to pay costs after that appeal until ordered
    to do so, and appealing the trial decision on the second last day  I am convinced
    that this appeal appears to be frivolous and vexatious.

(ii)

Good reason to believe appellant has insufficient assets in Ontario

[21]

I
    turn to the second branch of the test, which asks whether the appellant has
    sufficient assets in Ontario to pay the costs of the appeal.

[22]

The
    appellants only asset of any significance (apart from a 9-year old car and a
    12-year old motorcycle) is a one-quarter interest in a cottage property, which
    he owns with other family members. That interest is allegedly worth $50,000.

[23]

I
    have doubt about the marketability of a part-interest in a family cottage,
    which could probably only be realized  if at all  after litigation. Even
    assuming one could execute against the part interest, one would be acquiring a
    lawsuit and potentially a liability.  Moreover, this leaves nothing for the
    outstanding judgment and costs.

[24]

Requiring
    the respondent to rely on such an illiquid and unmarketable asset is contrary
    to the purpose of r. 61: namely, 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:
Combined Air Mechanical Services Inc. v. Flesch,
2010
    ONCA 633, 268 O.A.C. 172 (In Chambers).

[25]

I
    therefore find the appellant has insufficient assets in Ontario to pay the
    costs of the appeal. The respondent has satisfied r. 61.06(1)(a).

(2)

Rule 61.06(1)(c)  Other good reason to order security for costs

[26]

Had
    I found that the appeal had a low prospect of success, but did not appear to be
    frivolous and vexatious, I would have ordered the appellant to post security
    for costs nonetheless under r. 61.06(1)(c).

[27]

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: see Perron v. Perron, 2011 ONCA 776, 345 D.L.R. (4th) 513; Baker v. Rego, 2013 ONSC 3309, 31 R.F.L. (7th) 323 (Div. Ct.); and Children's Aid Society of York Region v. G.S., 2010 ONSC 3804, 98 R.F.L. (6th) 179.

[28]

This
    good reason balances the need to ensure an appellant is not denied access to
    the courts, with the respondents right to be protected from the risk the
    appellant will not satisfy the costs of the appeal: see
Perron
, at
    paras. 22-23.

[29]

In
    my view, this good reason applies in this case.

[30]

As
    I noted above, the appellants assets do not protect the respondent from the
    risk he will not satisfy the costs of the appeal. On the other hand, the assets
    may provide the appellant with the means to post security for costs.

[31]

In
    addition, the appellant, who works as a bartender, acknowledged that he is paid
    in cash. The trial judge found as fact that there was little or no proof of the
    appellants income. Indeed, the appellant relied on this consideration to
    explain why the house purchase transaction took place the way that it did in
    his version of events. At trial, the appellant gave evidence that he earned at
    least $500 a week, the amount of cash he gave weekly to his former wife for
    rent and other expenses. That income, while providing him a basis to pay costs,
    would be nearly impossible for the respondent to garnish to satisfy costs.

[32]

I
    am satisfied that the appellants assets and employment income provide him a
    basis to pay costs  thus ensuring he is not denied access to justice  but
    that the nature of those assets and income present an undue risk that the
    respondent would be unable to collect costs.

[33]

Considering
    the low merit of the appeal, remedying the imbalance between the appellants
    relative invulnerability to costs awards and the respondents corresponding
    exposure provides a good reason to order the appellant to post security for
    costs in this case.

Disposition

[34]

For
    these reasons, I order that the appellant post security for costs in the amount
    of $15,000.00 within 60 days of the date of this order, failing which a judge
    of this court may dismiss the appeal on motion.

[35]

If
    counsel are unable to resolve costs of this motion, they may make written
    submissions, limited to five pages, excluding the costs outline, within 30
    days.

G.R. Strathy C.J.O.


