



COURT OF APPEAL
        FOR BRITISH COLUMBIA




Citation:



Life
                Investors Insurance Co. of America v. TIS Management Ltd.,









2005 BCCA
            11




Date: 20050110




Docket: CA031236

Between:

Life Investors Insurance Company of America,
CRC Creditor Resources Canadian Dealer Network Inc.,
Top Insurance Agency Ltd.,
Creditor Resources Inc.

Respondents

(
Plaintiffs/

Defendants
        by Counterclaim
)

And

TIS Management Ltd.

Appellant

(
Defendant/
Plaintiff by Counterclaim
)











Before:



The Honourable
            Mr. Justice Lowry





(In Chambers)









P. J. Sullivan



Counsel for the Appellant





M. Gianacopoulos
            and

J. L. Zacharias





Counsel for the Respondents





Place and Date of Hearing:



Vancouver, British Columbia





December 22, 2004





Place and
            Date of Judgment:



Vancouver, British Columbia





January 10, 2005







Reasons for Judgment of the Honourable Mr. Justice Lowry:

[1]

The
      respondents, referred to as "Life Investors", apply for security
      in the amount of $14,000 for the costs of this appeal.  The application
      is opposed on the ground that the appellant, TIS Management Ltd. ("TIS"),
      has no assets.  The company maintains that it is accordingly unable to
      post security and that a requirement that it do so will preclude the further
      prosecution of the appeal.

[2]

The
      application was initiated over a year ago.  There was then a question as
      to whether the company was in fact without assets.  I adjourned the matter
      to permit TIS to adduce better evidence in that regard.  It is now, for
      present purposes, accepted that the company has, in fact, no assets.  However,
      the appeal is being funded by its shareholders, Donald Remenda and his
      wife Jennifer Scott, who say that their cash resources are largely exhausted
      but who own four residential properties, the unencumbered value of which
      exceeds $1.0 million.

[3]

The
      issue is whether, in the circumstances, TIS, being the corporate vehicle
      for the operation of a family business, should be required to post security
      for costs when the security would, in fact, have to be posted by its principals.

[4]

Life
      Investors is a large group of insurers having substantial assets.  TIS
      was its agent.  A dispute arose that resulted in Life Investors terminating
      the agency agreement and commencing this action for a declaration that
      it was entitled to do so.  It sought an award of damages against TIS and
      against its principals personally.  TIS counterclaimed for withheld commissions
      alleged to exceed $3.0 million.  The case turned in large measure on the
      interpretation of the agency agreement.  Life Investors prevailed.  It
      was awarded damages of more than $250,000 and costs.  The action against
      Mr. Remenda and Ms. Scott and the counterclaim against Life Investors were
      dismissed.  There would appear to be little prospect of Life Investors
      recovering the damages and costs it has been awarded.

[5]

Section
      24 of the
Court of Appeal Act
, R.S.B.C. 1996, c. 77
      provides:

(1)   A
      justice may order that an appellant pay to or deposit with the registrar
      security for costs in an amount and in a form determined by the justice.

(2)   A
      justice may dismiss as abandoned the appeal of an appellant who fails to
      comply with an order made under subsection (1).

[6]

Security
      for costs of an appeal should be ordered unless the appellant shows that
      it should not be ordered:
WHA 820 Holdings Ltd. v. Daymax Management
      Inc.
, 2004 BCCA 414 ¶ 19, citing
Milina v. Bartsch
(1985),
      5 C.P.C. (2d) 124 (B.C.C.A.).  The primary consideration is the financial
      position of the appellant.  If the appellant's financial position is so
      weak that an order requiring it to post security would preclude it from
      prosecuting the appeal, the court will be slow to order it to do so in
      the absence of the appeal being frivolous.  Conversely, if the appellant's
      financial position is sufficiently strong that security is unnecessary,
      requiring that security be posted may not be appropriate.

[7]

TIS
      opposes this application solely on the ground that an order requiring it
      to post security for costs will preclude it from prosecuting the appeal
      because the company has no assets.  TIS maintains that the fact that its
      principals, who have an interest in the outcome, could post security for
      costs does not mean that the company can do so.

[8]

There
      do not appear to be any decisions of this Court that bear directly on the
      issue.
Fat Mel's Restaurant Ltd. v. Canadian Northern Shield Insurance
      Co.
(1993), 76 B.C.L.R. (2d) 231 (C.A.), and the authorities cited
      therein at paras. 28-29, provide some support for Life Insurers' contention
      that the ability of a company's principals to post security is a consideration
      in determining whether a company, having no independent means of posting
      security, should be ordered to do so.  The case was concerned with an application
      for security for costs of a trial under s. 229 of the
Company Act
,
      R.S.B.C. 1979, c. 59 where different considerations arise.  However, this
      Court took the view that the principals of the company were pursuing the
      action through the company and ordered it to post security for the costs
      of the trial.

[9]

In
      reversing a recorder's dismissal of an application for security for the
      costs of a trial under similar legislation in
Keary Developments
      Ltd. v. Tarmac Construction Ltd.
, [1995] 3 All E.R. 534, the English
      Court of Appeal took much the same view as was taken by this Court in
Fat
      Mel's.
At page 540, it was said:

However, the court should consider not only whether the plaintiff
      company can provide security out of its own resources to continue the litigation,
      but also whether it can raise the amount needed from its directors, shareholders
      or other backers or interested persons.  As this is likely to be peculiarly
      within the knowledge of the plaintiff company, it is for the plaintiff
      to satisfy the court that it would be prevented by an order for security
      from continuing the litigation [authority cited].

[10]

In
      principle, I see no reason why the same cannot be said with respect to
      an application for security for costs of an appeal under s. 24 of the
Court
      of Appeal Act.
TIS cannot be heard to say that it will be precluded
      from further prosecut­ing its appeal if required to post $14,000 in security
      for Life Investors' costs because the amount needed can, it would appear,
      be easily raised by the company's principals who are funding the appeal
      and who stand to benefit from its success.

[11]

It
      seems to me that, at least where an impecunious appellant is the corporate
      vehicle for the operation of a family business, and an appeal is taken
      for the benefit of the two shareholders who are funding the litiga­tion,
      the fact that the company is without an independent means of posting security
      should not, without more, defeat the application.

[12]

TIS
      will accordingly be required to post security for Life Investors' costs
      of the appeal in the amount of $14,000 by depositing that amount with the
      Registrar of the Court within 30 days or in a manner agreeable to Life
      Investors.



The Honourable Mr. Justice Lowry




