



COURT OF APPEAL FOR BRITISH COLUMBIA




Citation:



Kaban Resources Inc. v. Goldcorp Inc.,









2021 BCCA 6




Date: 20210108

Docket: CA47032

Between:

Kaban Resources
Inc.

Appellant

(Plaintiff)

And

Goldcorp Inc.,
Goldcorp Holdings (Barbados) Ltd., and Guatemala Holdings (Barbados) Limited

Respondent

(Defendants)




Before:



The Honourable Mr. Justice Grauer

(In Chambers)




On appeal from:  An
order of the Supreme Court of British Columbia, dated September 4, 2020 (
Kaban
Resources Inc. v. Goldcorp Inc.
, 2020 BCSC 1307, Vancouver Docket S165822).




Counsel for the Appellant
(via videoconference):



R.D. Gibbens, Q.C.





Counsel for the Respondents
(via videoconference):



A. Cocks





Place and Date of Hearing:



Vancouver, British
  Columbia

December 21, 2020





Place and Date of Judgment:



Vancouver, British
  Columbia

January 8, 2021










Summary:

The respondents apply for
security for costs of the appeal and the proceedings below in the respective
amounts of $16,017.95 and $163,851.14. The respondents seek an order that the
appeal be stayed pending the posting of security for costs and that the respondents
be at liberty to apply to have the appeal dismissed as abandoned should the
appellants fail to post security. Trial costs is this matter have not yet been
assessed. Held: the applications for security for costs of the appeal and trial
are allowed, but not in the amount sought by the respondents.
Security for costs of the appeal are
ordered in the amount of $11,200.
The appellant led no evidence
that would demonstrate that an order for security for costs would prevent it
from pursuing this appeal, and failed to meet its onus of demonstrating that it
would not be in the interests of justice to order security for costs of the
appeal. Security for costs of the trial are also ordered, but in the amount of
$60,000. The manner in which the appellant pursued its claim in the proceedings
below caused the respondent to obtain and deliver a costly expert report on the
question of damages. Now, the parties cannot proceed to assess trial costs
without waiving privilege over the expert report, practically preventing the
respondents from pursuing its remedies from trial. As such, the respondents
have established real prejudice and met the onus of demonstrating that it is in
the interests of justice to order partial security for costs of the trial.
The appeal is stayed for 30 days to permit
the appellants time to post the security. In the event the appellants fail to
post the security ordered, the respondents are at liberty to apply to have the
appeal dismissed as abandoned.

Reasons for Judgment of the
Honourable Mr. Justice Grauer:

Introduction

[1]

The appellant, Kaban Resources Inc, has brought this appeal from the
judgment of Mr. Justice Voith, then of the Supreme Court, dismissing its
claim after a summary trial.  Justice Voiths reasons for judgment are indexed
at 2020 BCSC 1307.

[2]

The respondents, whom I shall describe collectively as Goldcorp, now
apply under sections 24(1) and 10(2)(a) and (b) of the
Court of Appeal Act
,
RSBC 1996, c 77, for an order requiring the appellant to post security both for
the costs of the appeal, and for their costs of the proceedings below. 
Goldcorp seeks security in the amount of $16,017.95 for a one-day appeal, and
in the amount of $163,851.14 for its trial costs (in excess of existing
security), and asks that the appeal be stayed pending deposit of the amounts
sought. Goldcorp also seeks the costs of this application payable forthwith.

Background

[3]

The appellants claim against Goldcorp was for damages for the wrongful
repudiation of a contract between the parties.  To summarize matters very
briefly, the parties had signed a letter agreement on February 3, 2016,
providing for the transfer of mining assets of Goldcorp in Guatemala on various
terms and conditions.  On March 14, 2016, the appellant delivered an agreement
to Goldcorp that purported to comply with the terms and conditions of the
letter agreement, but involved a new party, Fortuna Silver Mines Inc., not
mentioned in the letter agreement.  Goldcorp had something to say about this,
responding by letter on March 17, 2016.  On March 21, 2016, Kaban sent an email
to Goldcorp asserting that the March 17 letter constituted a repudiation of the
February 3 letter agreement, and advising that Kaban accepted the repudiation,
and considered the letter agreement to be at an end.

[4]

As I will discuss in more detail below, at a relatively early stage in
the Supreme Court proceedings, the appellant was ordered to post security for
costs in the amount of $60,000.  It did so.  The matter was later set for trial
by jury, and ultimately came before Justice Voith on Goldcorps summary trial
application.

[5]

As Justice Voith noted at para 5, the application raised four issues:


i.

Is this application suitable for disposition under Rule 9-7?


ii.

Did the Letter Agreement contain various implied terms?


iii.

Was there any obligation on Goldcorp to consent to the Fortuna
Agreement? and


iv.

Did
the March 17 Letter constitute a repudiation of the Letter Agreement?

[6]

The parties were agreed as to the first issue: the application was
suitable for disposition by way of summary trial.  As to the rest, Justice
Voith noted at para 6 that each issue was independent.  Goldcorp would succeed
if the answer to question (ii) were yes, or if the answer to either of
questions (iii) or (iv) were no.  The judge concluded that the answer to (ii)
was yes, the answer to (iii) was no, and it was unnecessary to answer
question (iv).

[7]

Accordingly, the judge dismissed the appellants claim with costs. 
Goldcorp subsequently applied for double costs under Rule 9-1(5)(b) of the
Supreme Court Civil Rules
.  That application was dismissed in reasons
delivered December 15, 2020, and indexed as 2020 BCSC 1982.

[8]

I turn next to consider Goldcorps application for security for the
costs of this appeal.  I will then consider its application for security for
its trial costs.

Security for the costs of the appeal

[9]

The relevant considerations have been discussed in many cases.  I will
quote from one, the reasons of Madam Justice D. Smith (in Chambers) in
Arbutus
Bay Estates Ltd v Canada (Attorney General)
, 2017 BCCA 133:

[17]

The appellant against whom security is sought bears the onus of showing
why security should not be required:
Creative Salmon Company Ltd. v.
Staniford
, 2007 BCCA 285 at para. 9. The ultimate question is whether
the order would be in the interests of justice:
Lu v. Mao
, 2006 BCCA 560
at para. 6. The following relevant considerations were set out in
Lu
at
para. 6:

(a) the appellants financial
means;

(b) the merits of the appeal;

(c) the timeliness of the
application; and

(d) whether the costs will be
readily recoverable.

[18]

The appellants financial position is the principal basis on which an
order for some, all, or none of the security for appeal costs is made. See
Zen
v. M.R.S. Trust Company
(1997), 88 B.C.A.C. 198 at para. 18. It is a
discretionary order. Courts have also distinguished between corporate and
individual plaintiffs, generally treating corporate plaintiffs with less
flexibility.

[10]

As Justice Smith observed, the onus is on the appellant to
establish that the interests of justice require that security
not
be
ordered.

[11]

There is no doubt that Goldcorp has brought this application in a timely
manner.  Accordingly, the question really comes down to the appellants
financial position and the merits of its appeal.  These need to be balanced in
order to ensure that the interests of justice are not frustrated by an order
for security of costs inhibiting a meritorious appeal.

[12]

In this case, it is relevant to note that the appellant is a shell
company with no active business.  If it has any exigible assets, or other means
of securing costs, it has declined to adduce any evidence of such, though
repeatedly invited to do so by Goldcorp in order to avoid this application.  It
has been able to raise funds, including $60,000 to post in the court below to
secure Goldcorps costs there, but that is quite a different thing from having
the ability to satisfy a judgment of costs against it.  No one connected with
the appellant has come forward to undertake to cover costs.

[13]

In essence, the appellant rests its opposition to the application on
what it maintains is a meritorious appeal.  It has not, however, led evidence
to indicate that if it is obliged to post security for the costs of the appeal,
it will be unable to proceed.

[14]

I am satisfied that the appellant should be ordered to post security for
Goldcorps costs of this appeal.  The appellant has failed to meet the onus
upon it of demonstrating that it would not be in the interests of justice to make
the order.

[15]

With respect to the merits of the appeal, I would not suggest that the
appeal is bound to fail.  Nevertheless, the grounds it raises attract,
prima
facie
, a deferential standard.  Though they are framed as errors of law,
they raise questions of contractual interpretation.  But even if properly
described as errors of law, the appellant is obliged to charge uphill given the
trial judges findings.  An additional ground of appeal, alleging that the
judge created a reasonable apprehension of bias through  engaging in
ad
hoc
judicial moralism also faces the significant hurdle of a heavy burden,
given the presumptions of impartiality and judicial integrity.

[16]

The question then becomes, how much should the appellant be obliged to
post as security for Goldcorps costs of the one-day appeal?  Goldcorps draft
bill of costs seeks the maximum for the items relating to the preparation of
the factum and preparation for the hearing of the appeal.  Given the nature of
the appeal, I consider that unlikely to be achieved on an assessment.  Its
expected disbursements include the sum of $2,850 for transcripts, which will be
disputed in the context of a summary trial, where the evidence was all in
affidavits.  In the circumstances, I would consider $8,000 for costs and
applicable taxes, and $3,200 for disbursements and taxes, to be a fair estimate
for present purposes.  Accordingly, I order the appellant to post $11,200 to
secure Goldcorps costs of this appeal.

Security for trial costs

[17]

As Justice Smith observed in the
Arbutus Bay Estates
case at para
16, the principles relating to an application for security for the costs of
trial differ from those relating to security for the costs of the appeal.  Most
importantly, the onus flips from the appellant to the respondent.  In para 19,
Justice Smith said this:

[19]      The principles governing the exercise of discretion
in awarding security for trial costs are set out in
Fat Mels Restaurant
Ltd. v. Canadian Northern Shield Insurance Company
(1993), 76 B.C.L.R. (2d)
231 (C.A.); and
Kropp v. Swanaset Bay Golf Course Ltd.
(1997), 29
B.C.L.R. (3d) 252 (C.A). They include:

(a)     
The onus is on the applicant to show that it is in the interest of justice to
order posting for security of trial costs;

(b)     
The applicant must show prejudice if the order is not made; and

(c)      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
Bronson v. Hewitt,
2012 BCCA 268 at para. 13.

[18]

A relevant consideration is the fact that, generally, in relation to
collecting its trial costs, the respondent will be in no worse a position by
reason of the appeal than it was before the appeal.  It follows that an important
question is whether the appellants pursuit of the appeal negatively alters
Goldcorps ability to recover sums found by the trial court to be owing to it
(for instance, by the appellant obtaining a stay pending appeal): see, for
instance,
D Bacon Holdings Ltd v Naramata Vines Inc
, 2010 BCCA 427 at
paras 2526;
Agent E v Canada (Attorney General)
, 2018 BCCA 492 at para
17; and
EB v British Columbia (Child, Family and Community Services)
,
2020 BCCA 263 at para 29.

[19]

The appellant contends that Goldcorp has demonstrated no such negative
effect here, and indeed already has the benefit of security for its trial costs
in the amount of $60,000.  Moreover, the appellant points out, Goldcorp has yet
to have its trial costs assessed, a step that is usually expected unless the
interests of justice dictate otherwise:
Arbutus Bay Estates
at para 20.

[20]

Goldcorp maintains that it has demonstrated a negative effect, and real
prejudice.  I agree.  The question is whether it is sufficient to support the
amount of security it requests.

[21]

Goldcorp points to the manner in which the appellant pursued its claim
below.  Initially, it indicated that it would pursue matters in an economical
manner.  When Goldcorp raised the prospect of an application for security for
costs, the appellant sought to sever the questions of liability and quantum. 
It was in this context that it was ordered to pay security in the amount of
$60,000.

[22]

But, as Goldcorp notes, that is not what happened.  Instead, the
appellant set the matter down for a six-week jury trial on both liability and
quantum, set for the fall of 2020.  Although Goldcorp set its summary trial
application down for hearing in August 2020, it was obliged, it asserts, to
obtain and deliver a lengthy expert report on the question of damages, given
the pending jury trial.

[23]

The expense related to this expert report comes to a total of just over
$168,000.  This cost was not in contemplation at the time Goldcorp applied for
security for its trial costs, because the trial was then expected to be on liability
alone.

[24]

Now, because of this appeal, Goldcorp is not in a position to disclose
its expert file for the purposes of supporting this expense, because to do so
would waive privilege when the appellant seeks to have the case returned to the
Supreme Court for a trial on damagesthe subject of the expert report.

[25]

In these circumstances, I agree that prejudice arises.  Because of the
appellants change in tactics (which I do not criticize, but which has
consequences), Goldcorp has incurred a hefty expense that was not anticipated
when it first sought to secure its costs.  Now, because of the appeal, it
cannot proceed to assess those costs without waiving privilege. The practical
effect is much like a stay, since the respondent is practically prevented from
pursuing its remedies in the trial court, all in the context of an appellant
who appears to be costs-proof (compare
Chung v Shin
, 2017 BCCA 355 at
paras 3335).

[26]

But the fact remains that the appropriateness of the expert witness fee,
and the reasonableness of incurring it at the time it was incurred, are in
issue.  It is by far the largest component of Goldcorps unassessed bill of
costs for the proceeding below.

[27]

It is, of course, open to me to order full security as requested,
partial security or no security at all.  Given all of the factors I have
discussed, I consider that it is in the interests of justice to require the
appellant to post an additional amount to secure Goldcorps trial costsbut not
the full amount requested by Goldcorp, particularly without an assessment.  I
conclude that requiring the appellant to post the further sum of $60,000 would
be appropriate.

Disposition

[28]

Within 30 days, the appellant shall post the sum of $11,200 as security
for Goldcorps costs of this appeal.

[29]

Within 30 days, the appellant shall post the sum of $60,000 as further
security for Goldcorps costs of the proceedings in the Supreme Court.

[30]

The appeal is stayed pending the posting of security as ordered.

[31]

Goldcorp will be at liberty to apply to have the appeal dismissed as
abandoned in the event the appellant fails to comply with this order.

[32]

Goldcorp seeks the costs of this application payable forthwith, in any
event of the cause.  In the circumstances, given that the appeal may continue,
I award Goldcorp the costs of this application in the cause.  I note, moreover,
that Goldcorps draft bill of costs already includes the costs of preparation
for and attendance at this application.  In the circumstances, an order
requiring the appellant to pay Goldcorp the costs of this application forthwith
in any event of the cause, as Goldcorp requests, would be equivalent to
requiring the appellant to pay the application costs twice: once forthwith, and
a second time when posting the security that has now been ordered.

The
Honourable Mr. Justice Grauer


