



COURT OF APPEAL FOR ONTARIO

CITATION: Hilson v. 1336365 Alberta Ltd.,
    2019 ONCA 727

DATE: 20190917

DOCKET: M50771 (C65298)

Lauwers
    J.A. (Motion Judge)

BETWEEN

Janet
    Louise Hilson

Plaintiff (Respondent)

Appellant by way of cross-appeal

Moving Party

and

1336365
    Alberta Ltd., 1336367 Alberta Ltd., 1336364 Alberta Ltd.,

1320950
    Alberta Ltd., 1336366 Alberta Ltd.,

Ross Charles Lightle
and
Barbara Lightle

Defendants (Appellants)

Respondents by way of cross-appeal

Responding Parties

Howard W. Reininger, for the moving
    party

Jonathan Rosenstein, for the responding
    parties

Heard: September 13, 2019

REASONS
    FOR DECISION

[1]

The moving party and the respondent in this
    appeal, Janet Louise Hilson, seeks an order for security for costs from the
    appellants, Ross Charles Lightle and Barbara Lightle, under r. 61.06(1)(a) and
    (c).

[2]

The context is set by the decision of the trial
    judge, Lococo J. of the Superior Court of Justice, in which he granted judgment
    against the personal respondents, the Lightles, in the sum of $723,479.66 plus
    interest at the rate of 12 percent per annum from July 3, 2012. His reasons for
    decision were issued on March 26, 2018 and are reported at 2018 ONSC 1836. This
    court heard the appeal on November 15, 2018, but the decision issued by the
    court on May 27, 2019 was withdrawn and the matter is set to be reargued on
    October 30, 2019. The moving party did not seek an order for security for costs
    before the first appeal hearing.

[3]

Rule 61.06(1)(a) and (c) provide:

(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)[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.

...

(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.

[4]

The principles applicable to this motion are set
    out in
Groia & Company Professional Corporation
    v. Cardillo,
2019 ONCA 165, at paras. 4-7.

[5]

To grant an order for security for costs under r.
    61.06(1)(a), the motion judge must: (a) have good reason to believe the appeal
    has no merit and is therefore frivolous and vexatious, and (b) have good reason
    to believe the clients have insufficient assets in Ontario to cover the costs
    of the appeal:
Schmidt v. Toronto-Dominion Bank
(1995), 24 O.R. (3d) 1,
    1995 CarswellOnt 154 (C.A.), at para. 15. As this court observed in
Schmidt
,
    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.

[6]

Considering
r.
    61.06(1)(a), I am unable to conclude that the appeal has so little merit that
    it reaches the threshold of being frivolous and vexatious. The appellants note
    that the main legal issue was left open by this courts predecessor in
Martin
    v. Youngson
, 55 O.L.R. 658, [1924] O.J. No. 77 (C.A.), at para. 20:

Dealing now with the successive points argued
    by the appellant, I think that this is "an action upon a covenant
    contained in an indenture of mortgage," and therefore comes within sec.
    49, subsec. 1(k), of the Limitations Act. The whole document, exhibit 1, is an
    indenture of mortgage.
I express no opinion as to what would be the proper
    conclusion if the guaranty were contained in a separate collateral document.
That point can be decided when it arises. But, so far as this action is
    concerned, it seems to me that it falls precisely within the words of the
    statute, and therefore that the period of limitation is 10 years, and not 20.
    [Emphasis added.]

[7]

Since this is the very question of law to be
    addressed in the appeal, I venture no opinion on the merits, nor have I read
    the withdrawn decision, despite the appellants encouragement to do so. It is
    utterly without weight in this calculus.

[8]

With respect to r. 61.06(1)(c), Strathy C.J.O. pointed
    out in
Henderson v. Wright
, 2016 ONCA 89,
345
    O.A.C. 231,
paras. 27 and 28:

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.

This "good reason" balances the need
    to ensure an appellant is not denied access to the courts, with the
    respondent's right to be protected from the risk the appellant will not satisfy
    the costs of the appeal. [Internal citations omitted.]

[9]

In
Combined Air Mechanical Services Inc. v.
    Flesch
, 2010 ONCA 633, 268 O.A.C. 172, Laskin J.A. added a gloss, at para. 8:

What constitutes "other good
    reason"? The court does not have a closed list of cases in which security
    for costs has been ordered under the residual category. The list of reasons
    justifying security under the residual category is open ended. However, the
    "other good reason" must be related to the purpose for ordering
    security: 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. And, the
    "other good reason" should be a fairly compelling reason, as the
    respondent cannot meet the requirements of either of the first two categories.
    Security for costs awards under the residual category are not to be made
    routinely.

[10]

I accept that the moving party has made out a
    reason for the order sought, as noted by Laskin J.A., that is related to the
    purpose for ordering security: 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. While the evidence of the appellants effort to escape
    liability and to evade eventual enforcement of a judgment debt is not as strong
    on the evidence as in
Groia
, I am prepared to accept the moving partys
    assertion that the appellants have no assets in Ontario, and the hearsay
    evidence contained in the letter from her British Columbia counsel providing
    some information about the disposition of the appellants assets there. The
    appellants tendered no evidence in response and I am prepared to draw an
    adverse inference that the moving partys assertions have merit.

[11]

My difficulty is with the moving partys delay
    in bringing the motion. Delay is a relevant factor, as noted by Huscroft J.A.
    in
Trillium Motor World Ltd. v. General Motors of Canada Ltd.,
2016 ONCA
    702,

2
    C.P.C. (8th) 37, at paras. 31 and 35. The slim evidence adduced by the moving
    party relates to British Columbia transactions in 2011-2013. This was well
    known to the moving party and she did not bring a motion before the first
    appeal was argued. Counsel provides no explanation for the delay, but his
    emphasis on this courts withdrawn reasons leads to the inference that he is
    relying on the low prospect of success factor. But such an inference is not
    open to me.

[12]

The authority to order security for costs is
    discretionary.
The costs of the appeal have all been
    incurred except for the upcoming hearing on October 30, 2019, which will be a
    reprise of the earlier argument. In my view, at this late stage there must be
    good reason to disturb the status quo ante, but there is none.

[13]

I therefore dismiss the moving partys motion
    for security for costs, with costs in the amount of $3,500 all-inclusive, to be
    paid to the responding parties in the cause.

P.
    Lauwers J.A.


