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RTA - Appeals - Security for Costs

. Faraone v 285 Spadina SPV Inc.

In Faraone v 285 Spadina SPV Inc. (Div Court, 2023) the Divisional Court considered a security for costs motion in an appeal, which was from an unusual RTA s.207(2) application (which was allowed) to terminate and evict [SS: when the dollar value exceeds $35k RTA s.207(2) allows such applications to be brought in the Superior Court, not the LTB]:
[13] The Applicants ground their legal basis for security for costs in two rules from the Rules of Civil Procedure R.R.O. 1990, Reg. 194. Rule 61.06 (1) provides:
Security for Costs of 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

(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. R.R.O. 1990, Reg. 194, r. 61.06 (1); O. Reg. 465/93, s. 6.

(1.1) If an order is made under subrule (1), rules 56.04, 56.05, 56.07 and 56.08 apply, with necessary modifications. O. Reg. 288/99, s. 21
[14] The second mechanism by which security for costs can be ordered pending an appeal comes from r. 56.01, referred to above in r. 61.06 (1)(b). The Applicants submit that Rule 56.01(1)(c) applies here because the Respondent owes the sum of $13,721.21 in the underlying Application, which remains unpaid in full. Rule 56.01(1)(c) provides:
56.01 (1) The court, on motion by the defendant or respondent in a proceeding, may make such order for security for costs as is just where it appears that,


(c) the defendant or respondent has an order against the plaintiff or applicant for costs in the same or another proceeding that remain unpaid in whole or in part;
[15] In Yaiguaje v. Chevron Corp. 2017 ONCA 827; 138 O.R. (3d) 1, the Court of Appeal for Ontario confirmed that an order for security for costs is a discretionary measure. Courts should carefully consider whether such an order is “just” (at para. 19). Security for costs can be a tactic in litigation which can prevent a case from being heard on its merits. The Court of Appeal offered guidance in Yaiguaje on the relevant factors on such motions. These factors include the merits of the claim, the impact of actionable conduct by the applicant, delay in bringing the motion, the impact of actionable conduct by the applicants on the available assets of the respondent, access to justice concerns and the public importance of the litigation.


[18] The evidence on this motion is that the Respondent does not appear to have assets in his own name in Ontario. In his oral submissions, the Respondent advised the court that he does have assets, (for example, two luxury vehicles) and his net worth is in the “seven figure” order of magnitude. I infer from this that he has assets that may not be available for fulfilling a judgment unless he decides to draw on those assets. Thus, an order for security for costs would not have a disproportionate or adverse impact on his personal assets.

[19] This litigation is not of public importance, but the principles underlying it are of public importance because of access to justice concerns. The courts are charged with ensuring the orderly and timely settlement of disputes in a civil society. Attempts to frustrate, delay, or interfere with the adjudication of disputes must be seen and addressed. To do otherwise reduces public confidence in the administration of justice and causes deserving litigants unnecessary suffering. There is some evidence in the record before me that supports an inference that the significant financial prejudice suffered by the Applicants as a result of the rent arrears issues here has had consequences for their relationship.


[21] I find that the Applicants have met the tests for security for costs both in r. 61.06(1)(a) and in r. 56. 01(1)(c) and that making such an order is just. I find that the record of proceedings below, the findings of Justice Dineen and the ongoing apparent overholding without paying rent amount to “exceptional circumstances” which justify security for judgment. I find that “there is good reason to believe that the appeal is frivolous and vexatious” and that the Respondent “has insufficient assets in Ontario to pay the costs of the appeal”. Further, there is an outstanding, unpaid order for payment to the Applicants.


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Last modified: 06-06-23
By: admin