LOLG Successful in Obtaining
Security for Costs of Appeal
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On November 14, 2022, Lars Brusven and Melanie Zetusian successfully obtained security for costs of an appeal for their clients. In 2020, the appellant commenced an action against LOLG’s clients, in connection with fees allegedly owing under a real estate consulting agreement. In April 2022, LOLG brought a motion to stay the action against its clients—two foreign corporations—on the basis of jurisdiction simpliciter. Justice William Black of the Ontario Superior Court granted LOLG’s motion, finding that neither LOLG’s clients, nor the alleged contract at issue, were sufficiently connected to Ontario in order to ground the court’s jurisdiction.
The appellant sought to overturn the jurisdiction order at the Ontario Court of Appeal, alleging various errors in Justice Black’s jurisdiction analysis and weighing of the evidence. LOLG brought a motion under Rule 61.06(1)(b) on the basis that there was good reason to believe the corporate appellant had insufficient assets to pay a costs award if LOLG’s clients prevailed in the appeal. LOLG also sought security for costs under 61.06(1)(c) on the basis that there was “other good reason” to post security, given the lack of merit of the appeal and the appellant’s history of failing to pay costs awards.
The Court of Appeal for Ontario agreed with LOLG’s submissions and ordered the appellant to post security under both grounds. Justice Mary Lou Benotto found that the corporate appellant and its principal had insufficient assets in Ontario, and that the appeal had a low prospect of success. Justice Benotto also agreed with LOLG that the appellant's history of failing to pay costs awards warranted extra protection for LOLG’s clients by requiring that security be posted before the appeal proceeding continued.
The Court of Appeal’s decision offers a useful reminder of the tools available to parties to protect themselves and minimize financial exposure in meritless appeal proceedings brought by litigants that will be unable or unwilling to pay a costs award upon the disposition of the appeal. The Court’s endorsement can be found here: 2022 11 14 - Endorsement of Benotto J re security for costs